Friday, 28 May 2010

Philippine GDP up 7.3% in Q1

By EDU LOPEZ
Manila Bulletin
http://mb.com.ph/articles/259316/gdp-73-growth-q1

The domestic economy posted a 7.3 percent growth in the first quarter of the year, one of the highest in decades.

Economic Planning Secretary and National Economic and Development Authority (NEDA) Director General Augusto Santos said the improvement in the global economy, brighter economic outlook, increased business and consumer confidence, and election-related spending all contributed to the resurgence in economic activities.

“These have offset the adverse impacts of El Niño in the production of the agriculture sector, particularly the crops and fishery subsectors.

”Growth was driven by industry, fueled by the recovery in manufacturing. Products of petroleum and coal, food manufactures, and electrical machinery were the major contributors to the growth of the sector, said Santos.

Services also improved, with trade, private services, and finance posting higher growth. The economic growth in the first quarter of 2010 translated to an increase in employment by almost two million.

Santos noted that employment creation was seen more on services, followed by the industry sector. The continued strong inflows of remittances and the increase in employment particularly in services both fueled consumption.

Overseas Filipino remittances increased by 7 percent to reach US$4.3 billion in the first three months of 2010. With the growth in remittances, net factor income from abroad increased by 24.9 percent, boosting gross national product to grow by 9.5 percent.

With the preliminary first quarter estimate, Santos expects an upward revision in the full year 2010 Gross Domestic Product (GDP) growth rate projection of 2.6 to 3.6 percent.

National Statistical Coordination Board (NSCB) Secretary-General Romulo Virola noted that except for agriculture which was parched by the El Niño dry spell and the saturated communication subsector, all subsectors of the economy drew vigor from the global economic recovery, election-related stimuli, and the growth of income from (overseas Filipino workers (OFWs).

Manufacturing rebounded, supported by hefty contributions from trade and private services, particularly recreational and business services.

On the demand side, increased consumer and government spending boosted by the solid performance of external trade and increased investments in fixed capital formation contributed to the highest economic growth since the second quarter of 2007.

Santos said the government continues to monitor the downside risks to growth in order to implement the appropriate policies that would minimize their adverse impacts.

“First, there is the looming concern over the debt crisis in Greece which may have contagion effects in our financial sector, adversely affect our trade performance, as well as constrict inflows of overseas Filipinos' remittances.”

“Next is the growing possibility of La Niña developing immediately after the El Niño ends in June. The tragedies and debilitating experience brought by the strong tropical cyclones “Ondoy” and “Pepeng” last year should serve as a stern reminder for the need for disaster risk management,” said Santos.

With the much stronger economic rebound of most of our neighboring Asian countries, Santos said the Philippineshas to implement the necessary reforms that will improve the country's competitiveness to sustain the first quarter growth in the succeeding quarters, amidst increasing uncertainties.

Santos stressed the need to further improve our performance, especially in factors where the country has ranked low like business efficiency and infrastructure.

“Equally crucial is the need to improve revenue collection. While remaining committed to fiscal consolidation program over the medium term, public resources should be efficiently and effectively channeled primarily to quality infrastructure and human capital.”

“We should take advantage of the renewed confidence of both businesses and consumers to direct the country to a level of growth that is not only high but also pro-jobs and inclusive,” said Santos.

Santos added that 2010 will be a new chapter for the country. “We welcome the inspiring first quarter performance of the Philippine economy. Together with the generally smooth and peaceful elections held last May 10, we should take advantage of these positive developments in renewing our efforts for our country’s development,” said Santos.

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