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GDP grows 6.5% in Q3 on consumer spending — NSCB


UPDATED 11:45 a.m. - The Philippines’ gross domestic product (GDP) grew by 6.5 percent in the third quarter, due to low inflation, robust investments, and higher consumer spending, the National Statistical Coordination Board (NSCB) said on Thursday. “Services regained the driver seat as the prime mover of economic growth with the robust performances of trade, ownership of dwelling and real estate, private services and finance," said Romulo A. Virola, NSCB’s secretary general. GDP is the amount of goods and services produced by a country in a given period. The economy’s third quarter results, albeit lower than the 7.9 percent GDP recorded in the first half, “will encourage investors to invest in the local markets," Jonathan Ravelas, chief market strategist of BDO Universal Bank Inc., said in a text message to GMANews.TV. The GDP growth will “push the peso stronger and equities higher," he added.
A quarterly comparison of the Philippines' GDP. Source: NSCB. Graphics: Einstein Rojas, GMANews.TV
"Honeymoon growth"
Q3 economic results lift mood in Malacañang
Malacañang is optimistic that the Philippine economy will grow by 7 percent this year, after the gross domestic product (GDP) expanded by 6.5 percent in the third quarter. Finance Secretary Cesar Purisima believes the GDP will likely exceed the 6-percent target of fiscal and monetary authorities. "I think it’s going to be higher than 6 percent. That’s the best thing I can tell you. But the important thing is it’s at 6 percent, and the challenge is to make sure that in the future we sustain it at around this level, because it is at this level I think we will see a reduction in poverty," the finance chief said. In an interview with reporters, Presidential Communications Development and Strategic Planning Secretary Ricky Carandang said the 6.5 percent growth for the third quarter that was reported by the National Statistical Coordination Board Thursday morning signified that the Philippines may exceed its growth target of 5 to 6 percent by for 2010. “[The third quarter] was the first full quarter under the Aquino administration. Growth remains robust," Carandang said. Carandang said a decline in growth in agriculture and public construction spending probably accounted for the relatively slower GDP growth for the third quarter compared to 7.9-percent in the first half. “The good news is that consumption has picked up and most of the other indicators, [like] remittances, seem to indicate a robust consumption spending moving towards the end of the year. I think if it were not for agriculture we would’ve gotten a higher growth. Nevertheless, 6.5 percent brings us to about 7.5 percent for the first three quarters of the year, still a very healthy growth," he said. “If you look at the trend in the economy and if you look at the growth in the first three quarters we’re pretty likely, mathematically, to come in at a pretty good growth rate of maybe about 7 percent [at year-end]," the Palace official said. - Jam L. Sisante
“The honeymoon Q3 growth for President Aquino is the highest when compared with 0.4 percent for President Ramos, negative 0.7 percent for President Estrada, and 1.3 percent and 5.6 percent for the first and second terms, respectively, of President Arroyo," Virola said. The NSCB report cited other factors for the slightly slower growth of the GDP:
  • four successive quarters of El Niño-driven decline in agriculture;
  • lower government spending, and
  • the slowdown of mining and quarrying activities. “With the economic growth of the third quarter failing to match the robust performance during the preceding quarters, the seasonally adjusted estimate of the GDP declined by 0.5 percent compared to a 1.4 percent growth in the previous quarter," Virola said. Performance of different sectors According to the report, the agriculture, fishery, and forestry sector posted a 0.3 percent growth from the second quarter because of the gains in the poultry, fishery, other crops, and banana indices. After five consecutive quarters of growth, the industry sector failed to sustain its momentum, posting a 4.4-percent decline in the third quarter from the previous quarter. The NSCB report said the industry sector “failed to sustain its remarkable performance in the first semester" even though the manufacturing sector continued to recover on the heels of higher demand both from the international and domestic markets. Robust private construction, said to have doubled from last year, also failed to sustain the industry sector's growth. “Private sector-led construction activities almost doubled from a year ago," the NSCB said. Private construction rebounded to 41.1 percent in the third quarter from 9.2 percent last year. On the other hand, public construction dropped by 24 percent from a growth of 23.3 percent last year. The services sector — the driver of domestic growth in the third quarter — accelerated by 1.9 percent from only 0.8-percent growth in the second quarter. The GNP (Gross National Product) per capita, on the other hand, grew by 5.5 percent in July-September this year from 2.1 percent in April-June. Per capita GNP is the value of a country’s goods and services in a given period, divided by its population. On the demand side, consumer confidence and benign inflation resulted in higher household spending at 4.2 percent in the third quarter from 2.6 percent in the same period a year ago. Food expenditures registered a decelerated growth of 4.4 percent this quarter from 3.9 percent registered in the same period in 2009. Government consumption expenditure reversed its growth by 6.1 percent in the third quarter from 12.1 percent in the same period a year ago. Investments in fixed capital formation rose by 13.4 percent in the third quarter from -0.1 percent in the same period in 2009. Investments in durable equipment went up by 16.4 percent in the third quarter from a decline of 3.5 percent a year ago. The third quarter growth in the investments in durable equipment was the fourth consecutive double-digit growth. Total exports grew by 29.9 percent in July-September from a growth of -12.9 percent last year. Total imports also maintained its growth by 18.2 percent in the period from -26 percent last year. Total exports (P870.5 billion) exceeded total imports (P727.4 billion), resulting in a trade surplus of P143.2 billion. In the same period in 2009, trade balance posted a surplus of P25.1 billion. — with Jesse Edep/TJD/VVP, GMANews.TV
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