RP economy expands, averting recession

(Updated 3:28 PM) Government spending and double-digit growth of the Philippines’ construction and mining sectors helped the economy grow at a modest pace and avert a recession. The Philippine economy grew by 1.5 percent during the April to June period, the National Statistical Coordination Board (NSCB) on Thursday said. Although the second-quarter economic performance was a substantial reduction from the 4.2-percent GDP [gross domestic product] growth in the same period in 2008, it was a big improvement from the revised 0.6-percent output in the first quarter of 2009. The Economic Resiliency Plan and the reinvigorated construction and mining and quarrying sectors resuscitated the domestic economy during the second quarter," Romulo Virola, NSCB secretary general, said. Mining and quarrying rebounded to post a double-digit growth of 21.4 percent from a contraction of 13.7 percent recorded the previous year. The construction sector also soared since it benefited from “the release of funds for infrastructure projects in accordance with the ERP," the NSCB added. The construction industry surged by 16.9 percent, higher than last year’s 2.3 percent as public construction improved to 29.9 percent growth from negative 5.6 percent. A comparison of the first and second quarter economic performance showed an expansion of 2.4 percent, “effectively avoiding the recession that had threatened when GDP declined quarter on quarter by a revised 2.1 percent in the first quarter of the year." In the meantime, gross national product (GNP), which includes income from abroad, improved 4.4 percent, still lower than the 5.3 percent recorded in the same period last year. The domestic economy was supported by a 0.3-percent growth in Agiculture, Fishery and Forestry, which makes up 20 percent of the economy, and 3.1-percent expansion Services, which contributes half of the total economy. But for the second consecutive quarter, the economy was pulled lower by industry owing to the huge decline in the manufacturing sector. On the demand side, consumer spending rose 2.2 percent, a marked slowdown from the 4.1 percent recorded in the second quarter in 2008. But it remains higher than the revised 1.3 percent in the first three months of the year. The Personal Consumption Expenditure was also supported by the 9.1-percent acceleration by government consumption spending. The slide in personal consumption, which contributes about 70 percent to 80 percent to the economy, was earlier blamed for the nearly flat growth recorded in the first quarter. “The Philippines remains as one of the few economies enjoying positive GDP growth rates in the second quarter," said acting director general Augusto Santos of the National Economic and Development Authority. Santos said China, Vietnam, and Indonesia grew by 7.1 percent, 4.5 percent, and four percent, respectively, citing year on year calculations. Other Asian economies that continued to shrink include Taiwan, -7.5 percent; Japan, -6.4 percent; Thailand, -4.9 percent; Malaysia, -3.9 percent; Hong Kong, -3.8 percent; Singapore, -3.5 percent; and South Korea, -2.5 percent. For the year's first half, the economy posted a growth of one percent. This makes it easy for the economy to post a 2.6 percent growth in the second half and meet government’s high growth goals of 1.8 percent for the whole year, NEDA director for national planning and policy staff Dennis Arroyo said. However, he warned that owing to the “greenshoots phenomenon" – which signals a global economic recovery – oil prices are going up due to speculation. At Asian trading on Thursday, oil was at $71 per barrel, roughly twice its price of $35 per barrel at the start of the year. This is one of the risks that could affect the growth of the economy in the second half, Arroyo said. In a separate statement, Finance Secretary Margarito B. Teves said that the economy’s second quarter growth “will help increase our capability to further boost spending for quality projects." “Our tax effort has improved to 15.3 percent in the second quarter from 11.5 percent in the first quarter," Teve said. “These should support higher economic growth in the succeeding quarters and help us prepare for the global economic rebound." - GMANews.TV