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The Philippine economy has been damaged but not quite ravaged by the global financial turmoil and high oil prices that resulted in a decelerated third quarter GDP growth of 4.6 percent from 7.1 percent.  The decent growth in GDP drew on the strong performances of Manufacturing, Construction and Trade.  On the demand side, household spending led the growth followed by merchandise exports and construction.   The increase both in the stock and employment quality of Filipino residents working abroad drove NFIA to a 24.7 percent growth, from 31.9 percent last year, which propped up GNP by 6.5 percent from 9.1 percent.

The seasonally adjusted estimates of GDP and GNP kept the Philippine economy outside of recession territory as they grew by 0.9 percent and 1.5 percent, respectively, which, however were lower than their second quarter growths.

On the production side, Industry grew at a faster rate of 7.1 percent from 6.6 percent, while decelerated growths were recorded by Services, at 3.7 percent from 8.0 percent, and AFF, at 2.5 percent from 5.7 percent.  In terms of contribution to GDP growth, the Industry sector has outperformed the Services sector for the first time since the fourth quarter of 1997, contributing 2.3 percentage points against 1.9 percentage points.  AFF, on the other hand, contributed a minimal 0.4 percentage point.

As the country’s population reached an estimated 90.68 million, per capita GDP grew at a decelerated rate of 2.6 percent from 5.0 percent in the previous year while per capita GNP also went up at a lower rate of 4.5 percent from 6.9 percent.  Per capita PCE likewise decelerated at 2.6 percent from 3.6 percent.

Compensation inflow grew by a substantial 25.5 percent, from a marginal 0.4 percent gain last year, and kept NFIA growth robust at 24.7 percent despite the 46.3 percent decline in Property Income.  Meanwhile, Property Expense dropped by 6.7 percent from negative 24.4 percent in the previous year.

On the expenditure side, consumer spending reported a lower growth of 4.6 percent in the third quarter of 2008 from 5.7 percent a year ago.

General government consumption expenditure rose to 12.5 percent in the third quarter of 2008 from 6.4 percent in the same quarter last year.  The big boost was attributed to the substantial increase in the maintenance and other operating expenses (MOOE) of the government. 

Investments in Fixed Capital Formation slowed down to 4.8 percent from 7.6 percent in 2007. Increased public expenditures on capital outlay for priority projects expanded the growth of Public Construction by 20.0 percent from 11.5 percent a year ago, as government tried to stimulate the economy. Likewise, Private Construction sustained its growth by posting 13.8 percent from 19.5 percent recorded last year.  The growth of the sub sector was sustained by the increases in residential and non-residential constructions. The growth in both public and private construction resulted to the sustained growth of Total Construction by 15.8 percent from 16.8 percent in the same period last year. Meanwhile, Investments in Durable Equipment posted a meager growth of 0.01 percent from 2.33 percent in the previous year.  Increased investments were registered in sixteen (16) out of the twenty (20) types of fixed assets.

Total Exports grew by 4.7 percent from 3.7 percent last year boosted by the rebound in Total Merchandise Exports, which expanded by 4.8 percent from negative 0.2 percent registered last year.  Main growth drivers were the following:  Cathodes and Section of Cathodes of Refined Copper, which rebounded to 58.6 percent from negative 35.3 percent; Gold from Copper Ores, which shoot up by 166.8 percent from negative 76.8 percent; Prepared Tuna, which soared by 238.3 percent from negative 38.1 percent; Petroleum Naphtha, which grew by 119.2 percent from negative 48.5 percent; and, Desiccated Coconut, which rebounded to 28.6 percent from negative 9.9 percent. Meanwhile, Exports of Non-Factor Services grew, albeit at a much slower pace, of 4.6 percent in the third quarter of 2008 from 29.0 percent a year ago.

Total Imports went up to 5.1 percent from negative 5.0 percent in the previous year pushed up by the expansion in both Merchandise and Non Merchandise Imports. Total Merchandise Imports rebounded to a growth of 2.4 percent from negative 6.4 percent in the previous year, as Principal Merchandise Imports slightly grew by 0.1 percent from negative 6.8 percent in the previous year. The top contributors to growth among the Principal Merchandise Imports were:  Cereals and Cereal products, which jumped by 66.7 percent from 0.9 percent; Base Metals, which rebounded to 23.0 percent from negative 31.2 percent; Manufactures of Metals, up by 40.9 percent from negative 12.3 percent; Transport Equipment, up by 13.8 percent from negative 7.8 percent; and, Chemical Elements and Compounds, up by 10.0 percent from 4.3 percent. Meanwhile, Imports of Non-factor Services soared to a 46.0 percent growth from 22.0 percent in the previous year.

With the weakened economies of the country’s major trading partners in the third quarter of 2008, Total Imports (Merchandise and Non-factor Services), valued at 818.54 billion pesos exceeded Total Exports (Merchandise and Non-factor Services), valued at 766.56 billion pesos at current prices, resulting in a trade deficit of 52.00 billion pesos as against the trade deficit of 21.15 billion pesos registered in the same period last year. The current trade deficit is 3.0 percent of GNP compared to last year’s 1.0 percent.

During the quarter, the terms of trade posted an unfavorable Trade Index of 79.0 percent, lower than the 81.7 percent registered the previous year.

GNP Implicit Price Index (IPIN) stood at 535.2 percent from 485.9 percent in the previous year or a 10.1 percent growth from 2007.

 

ROMULO A. VIROLA
Secretary-General, NSCB

 

 

 

NATIONAL ACCOUNTS OF THE PHILIPPINES

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3rd Quarter 2008

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