Philippine Economy Posts a Scintillating 7.9 Percent GDP growth

Despite the El Niño phenomenon that scorched the Agriculture sector, a synergistic confluence of factors resulted in two consecutive quarters of GDP growth of over 7.0 percent.  The peaceful national elections, improved investors confidence especially among local investors, the global economic recovery, increased capital expenditure of government and a low base fueled the domestic economy to a scintillating 7.9 percent growth in the second quarter of 2010 from 1.2 percent last year.  The last time we experienced two consecutive quarters of more than 7 percent GDP growth was in the first and second quarters 2004 (7,2 percent and 7.1 percent, respectively), also preceding a presidential election.  Together with an upwardly revised first quarter GDP growth of 7.8 percent (from 7.3 percent), the first semester sizzled to 7.9 percent GDP growth, the highest semestral growth since 9.3 percent in the second semester of 1988.

For the second consecutive quarter, the Industry sector strongly supported by Services was the main driver of economic growth. Manufacturing sustained its first quarter production in response to the improved domestic and external demand and was shored up by Trade, Government Services and Private Services, particularly recreational and business services.

On the demand side, increased consumer and government spending, increased investments in Construction and Durable Equipment, and the second consecutive quarter of immense growth in external trade contributed to the highest quarterly growth since the second quarter of 2007.

The continued increase in the earnings our overseas workers sustained the NFIA, but at a much lower growth of 7.7 percent from 30.4 percent last year, pulling GNP growth to 7.9 percent from 4.4 percent in 2010.

For the first semester, GNP grew by 8.2 percent, its highest since 8.9 percent in the second semester of 1988.

However, removing the base effect and comparing 2010 with 2008 and 2008 with 2006, the first semester GDP growth from 2008 to 2010 is 8.8 percent, lower than the 11.6 percent first semester growth from 2006 to 2008.

The seasonally adjusted estimate of the GDP grew by 1.3 percent from 3.8 percent the previous quarter slowed down by the continuing decline of AFF.  The Agriculture, Fishery and Forestry sector declined by 0.2 percent while Industry, the main growth driver for two consecutive quarters, grew at a slower pace of 3.5 percent from 5.1 percent the previous quarter.  Services sectors likewise decelerated to 0.4 percent from 4.4 percent. Likewise, GNP slowed down to a 1.8 percent quarter on quarter growth from 2.0 percent.

Industry revved up the economy with a double-digit growth for the second consecutive quarter at 15.8 percent supported by Services which posted 6.4 percent while AFF declined by 3.0 percent for the third consecutive quarter.  For the first semester, Industry grew by 15.9 percent, the highest semestral growth ever.

As population reached an estimated 93.8 million, per capita GDP rebounded by 5.9 percent, the highest since the second quarter of 2007, from negative 0.8 percent in the previous year while per capita GNP accelerated to 5.8 percent from 2.4 percent.  On the other hand, Per capita PCE slowed down to 2.9 percent from 3.4 percent.  At current prices, the per capita GNP now stands at P49,532 or US$ 1,082 for the first semester.

Posted 26 August 2010