RP may enter recession as economy barely grows in Q1

(Update) MANILA, Philippines - The Philippines may slip into a recession, the government said after it reported that the economy barely grew during the first three months of the year. The Philippines’ gross domestic product (GDP) — which measures the amount of goods and services produced by the economy — rose by only 0.4 percent, the National Statistical Coordination Board (NSCB) said, citing the twin effects of the the US financial meltdown and the global crisis. Economic growth, however anemic, mainly came from construction, agriculture, transportation, communication and storage, mining and quarrying, and private services, the NSCB said on its Web site. While the latest growth figure is 89 percent lower than the 3.9 percent rate reported during the same period last year, the second quarter may even be worse, NSCB Secretary General Romulo Virola said. The second quarter will be challenging, “as seasonally adjusted GDP sank by 2.3 percent, the lowest for the past 20 years," Virola added. “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," the same official said in a statement posted at the NSCB Web site. “In addition, the Leading Economic Indicators for the second quarter breached into negative territory confirming the all too real threat of a recession." The NSCB also reported that the agriculture, fishery, and forestry sectors contracted by 1.0 percent in the first quarter after expanding by 0.9 in the last quarter. The contraction was blamed on declining harvests of corn, sugarcane, and other crops. For its part, the industrial sector 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 sector’s contraction resulted from the “substantial weakening of the manufacturing sector," the NSCB said. Meanwhile, the 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," the NSCB statement said. Similarly, total exports dived deeper to negative 18.2 percent from negative 7.7 percent last year as merchandise exports shrank by double-digits in the first quarter this year, the agency added. “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," the NSCB said. The Philippines’ total imports also contracted further, an indication that it bought lesser foreign-made raw materials to be processed and re-exported abroad. Inbound shipments plunged deeper 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," the NSCB said. These bleak figures have made Ralph G. Recto, National Economic and Development Authority (NEDA) director general, “less confident about meeting the country’s growth targets for this year." To meet the Philippines’ growth goals of anywhere from 3.1 to 4.1 percent, the GDP should expand between 4.1 to 5.4 percent during the next three quarters, he said. - GMANews.TV