Thursday, 28 May 2009

Philippine GDP Q1 registers uptick at 0.4%, GNP at 4.4%

Weighed down by the impact of the US financial meltdown and the global crisis, historic declines in manufacturing and trade sent the Philippine economy into hiccups, albeit afloat, with a GDP growth of 0.4 percent from 3.9 percent. The insipid growth in GDP drew on the positive contributions of Construction, Agriculture, Transportation, Communication and Storage, Mining and Quarrying, and Private Services. On the expenditure side, little growth drivers were Construction, Import of Non Factor Services, Personal Consumption Expenditure (PCE), Export of Non Factor Services, and Government Consumption Expenditure. Notwithstanding the difficulties faced by the global economy, the demand for the services of our OFWs continued to heighten as their increased deployment contributed to the hefty growth of Net Factor Income from Abroad (NFIA) of 40.8 percent from 36.2 percent last year, pushing GNP to grow by 4.4 percent from 6.4 percent the previous year.

A big challenge to the economic managers during the remaining month of the second quarter is the fact that the Philippine economy is now teetering into recession as seasonally adjusted GDP sank by 2.3 percent, the lowest for the past 20 years. The seasonally adjusted GNP likewise declined by 1.2 percent, marking the first time since the first quarter of 2001 when both GDP and GNP contracted quarter on quarter. In addition, the Leading Economic Indicators for the second quarter breached into negative territory confirming the all too real threat of a recession.
The seasonally adjusted Agriculture, Fishery and Forestry sector contracted by 1.0 percent in the first quarter after expanding by 0.9 in the last quarter with the declines of other crops, corn and sugarcane. Industry registered its lowest growth for the last twenty years as it sank by 6.6 percent from 0.1 percent gain in the last quarter. The substantial weakening of the manufacturing sector contributed immensely to the contraction of industry. Services sector posted no growth for the first quarter of 2009 compared to 0.2 percent recorded the previous quarter, as trade declined while other sub sectors slowed down. On a seasonally adjusted basis, the sector has grown less than one percent in each of the last five quarters.

With projected population reaching 91.56 million and the domestic economy barely growing, per capita GDP declined by 1.5 percent, the first since the third quarter of 2001. Per capita GNP still grew, however by 2.4 percent from 4.4 percent while per capita PCE declined by 1.1 percent from its year ago growth of 3.1 percent.

In the Net Factor Income from Abroad, Compensation inflow jumped by 26.9 percent from 6.1 percent in 2008. Property income however, plummeted to negative 50.2 percent from 19.3 percent while Property Expense likewise skidded by 30.4 percent from negative 26.6 percent. As a result, NFIA grew by 40.8 percent from 36.2 percent.

On the expenditure side, the continued rise in prices resulted in lower consumer spending at 0.8 percent from 5.1 percent a year ago.

With the disbursement of government funds for infrastructure projects, Government Consumption Expenditure (GCE) rebounded to 3.8 percent from negative 0.3 percent recorded last year.

Investments in Fixed Capital Formation in the first quarter of 2009 plunged to negative 5.7 percent from a growth of 3.0 percent in the same period last year. Investments in Durable Equipment plunged to negative 17.9 percent from a growth of 9.6 percent a year ago. The decline in the investments in durable equipment was the highest decline registered since the fourth quarter of 1998. Meanwhile, Private construction caused Construction to rebound from negative 4.1 percent the previous year to 9.9 percent while infrastructure investments by the government managed to improve Public Construction to a lower negative 4.4 percent from negative 10.9 percent.

Total Exports dived deeper to negative 18.2 percent from negative 7.7 percent last year as Merchandise Exports registered a higher double-digit negative growth in the first quarter of 2009. The lackluster performance of Merchandise Export was attributed to the slump in both Principal Merchandise Exports and Other Exports to negative 30.5 percent from negative 13.7 percent and negative 20.1 percent from 7.1 percent, respectively. Meanwhile, Exports of Non-Factor Services decelerated to 4.9 percent in the first quarter of 2009 from 5.9 percent.

Total imports further contracted to negative 19.2 percent from negative 2.6 percent in the previous year, largely attributed to the lackluster performance of merchandise imports. Total Merchandise Imports slipped further to negative 22.6 percent in the first quarter of 2009 from last year’s decline of negative 3.4 percent. All sub sectors of the sector dipped further to negative with Principal Merchandise Imports registering the biggest decline with negative 25.2 percent from negative 3.7 percent last year, Imports on Consignment, negative 36.5 percent from previous year’s negative 16.5 percent, and import commodities grouped under Others, negative 16.2 percent from negative 0.8 percent. Meanwhile, Imports of non-factor services grew by 18.9 percent in the first quarter of 2009 from 7.7 percent in 2008.

Total Imports valued at P530.9 billion pesos at current prices exceeded Total Exports valued at P528.6 billion pesos, resulting in a trade deficit of P2.3 billion pesos. In the same period last year, trade balance posted a bigger deficit of 28.3 billion pesos. The current trade deficit stood at 0.11 percent of GNP from last year’s 1.5 percent.

Terms of trade posted a Trade Index of 98.4 percent from 95.8 percent posted in 2008 while Trading losses for the quarter amounted to P1.9 billion pesos.

GNP Implicit Price Index (IPIN) stood at 517.8 percent from 494.8 percent in the previous year or a 4.6 percent inflation.

Secretary-General, NSCB

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