GDP posts 4.5% Q1 growth

The Philippine economy performed strongly during the first quarter of the year, with the 5.6-percent growth in the gross national output (GNP) exceeding the government’s forecast, and with the gross domestic product (GDP) hitting the high end of the target growth at 4.5-percent expansion, Socioeconomic Planning Secretary Romulo Neri said yesterday.

"Once again, the Philippine economy proved its tenacity as it grew strongly amidst grave geopolitical tensions in the first quarter of the year," Neri said. Aside from the lingering peace and order problem in Mindanao, the country also has to contend with the US-Iraq war as well as the outbreak of the fatal SARS virus during the period.

The growth in the benchmark gross domestic product (GDP) of 4.5 percent fell within the government’s four- to 4.5-percent target during the period while the broader gross national product (GNP) – or GDP plus net factor income from abroad – expanded way past the official forecast of 4.3 to 4.8 percent, largely on account of a 21-percent rise in overseas earnings.

Neri attributed the economic growth to the robust domestic demand, with private consumption rising at its fastest pace in four years and investments staging double-digit growth, time since 1997.

He said low inflation and the growing variety of consumer goods brought about by trade liberalization pushed the growth in private spending while investments increased mostly due to the stockpiling of oil by the energy companies.

He added growth remained broad-based across the major production sectors, "indicating the fundamental soundness of the administration’s policies to lift as many sectors as possible."

He cited the marked ability of the agriculture sector to withstand the cyclical drought or the El Niño phenomenon as seven of its nine subsectors led by corn, sugarcane, poultry and banana reaping gains, offsetting the contraction in palay output.

Agriculture, which contributes 20 percent to GNP, grew by 2.9 percent during the first quarter, lower than the 4.8-percent expansion a year earlier but still above government’s expectations.

Neri said the industry sector, which accounts for about 30 percent of GNP, improved by four percent as against 2.1 percent last year as manufacturing recorded its highest rise since 2000, doubling its growth from 2.4 percent to 5.3 percent.

"We are pleased to note that domestic-oriented firms provided much of the growth in manufacturing against the backdrop of slowing exports growth," the National Economic and Development Authority (NEDA) director-general said.

Yet it was the services sector, the main fuel of the economy with a 42-percent contribution to the GNP, which again sparked overall growth during the period as it expanded by 5.6 percent, topping its 4.8-percent growth the previous year.

In this sector, Neri said growth has become more diffused as a modest slowdown in communication was balanced by the more upbeat growth in finance, mainly insurance, home ownership, real estate and private services.

Neri added the growth performance in the first quarter bode well for the economy’s outlook for the whole year, sticking to the full-year targets of 4.2- to 5.2-percent GDP growth and 4.5 to 5.4 percent for GNP.

"We will continue to pursue policies that have worked well for the economy, especially those that will raise productivity and ensure macroeconomic stability," he said.