IDEA reported that “though slightly lower than the previous two quarters, the 6.6% third quarter growth of the Philippine economy reinforced expectations of a strong finish for the year 2007. Growing at an average of 7.1% for the first three quarters of the year, higher than the 5.4% growth during the same period in 2006, the Philippine economy is seen to achieve a full-year growth of 6.6% (IDEA forecasts), near the higher end of the government’s target range of 6.1% - 6.7%. Buoyant performances from all the three major sectors of the economy pushed the third quarter growth to one of the highest quarterly growths since 2000. Consumption spending, as well as government expenditures, registered sustained growths from a year ago, while capital formation likewise showed an uptrend from 2006.”
It further disclosed that “the Service sector remains to be the primary driver of growth, contributing 3.6 percentage points to overall economic growth. Growing at 7.2% from 5.8% in 2006, the sector’s leading contributors were Private Services (8.5% growth), Trade (8.2%) and Finance (7.9%). The growth of the Private services had been attributed to the continuous growth and expansion of the business process outsourcing (BPO) sector, while brisk retail sales of newly opened malls and buoyant insurance activity resulting in higher firm incomes were the primary drivers of the trade and finance sectors, respectively.
The Industry sector contributed 2.0 percentage points to overall economic growth, growing by 6.1%, from 4.9% in the previous year. Notable growth performances came from the Mining and quarrying (21.8% growth) and Construction (16.7%), which helped offset the rather languid growth of the manufacturing sector. Construction activities from both the private and public sectors were strong for the third quarter, posting double-digit growths of 13.1% and 20.2%, respectively, from last year.
Furthermore, “the strong performance of the Agriculture sector, growing at 5.6% from last year’s 3.6%, came on the back of higher crop output resulting from the end of the dry spell in various provinces, expansion in areas harvested, as well as good market prices for several crops. This was supported by the strong growth of the commercial and municipal fisheries, and partially offset the continuous decline being experienced by the Forestry sector” according to the same report.
Overall, due to the undeterred appreciation of the local currency, total Philippine exports contracted by 4.9% during the third quarter despite the 13.7% gains in exports of Non-Factor services, as Merchandise exports registered a negative 7.5% growth. Imports likewise showed a 6.3% contraction from the previous year. Nevertheless, the negative growths of these two sectors were offset by the strong performances of the other three components of the demand side – Personal consumption (5.6%), Government consumption (8.3%), and Capital formation (15.7%). Lastly, the 25.2% growth in Net Factor Income from Abroad, driven by record-high inflows of overseas remittances, likewise pushed the third quarter Gross National Product (GNP) to 8.2%, considerably higher than the 5.6% achieved a year ago according to the Institute for Development and Econometric Analysis (IDEA).
(Mr. Ed F. Limtingco can be reached at 0917-7220521 or at elimtingco@cibi.net.ph)