Philippine Economy grows by 0.8% in the 3rd Quarter of 2009

While some sectors are showing definitive signs of recovery from the global crisis, the domestic economy remains fragile, as GDP grew by 0.8 percent in the third quarter of 2009 from 4.6 percent last year and a revised 0.8 percent in the second quarter.  The decelerated economic growth benefited from Trade, Finance, Mining & Quarrying, Private Services, and Government Services sectors but was adversely affected by the third consecutive quarter of decline in the Manufacturing Sector.

On the demand side, growth came mainly from consumption by both Households and Government and from Merchandise Imports which have mildly recovered from the slump in the first quarter of the year.  The continued inflow of remittances from our overseas workers buttressed the NFIA, which went up by 26.0 percent from 22.6 percent last year, and pushed GNP to grow by 3.5 percent from 6.2 percent in 2008.

The seasonally adjusted estimate of the GDP grew by 1.0 percent lower than the 1.7 percent in the previous quarter.  However, the seasonally adjusted GNP accelerated to 2.2 percent from 1.9 percent in the second quarter of 2009.  On the production side, Services propped up the economy with a 4.0 percent growth, modest but indicating a continuously improving growth since the global financial crisis.  Likewise, AFF posted a lackluster growth of 1.6 percent but industry continues to be dogged by the crisis, declining by 4.4 percent, the lowest since the fourth quarter of 1998.

As population reached an estimated 92.4 million, per capita GDP declined by 1.2 percent from 2.5 percent in the previous year while per capita GNP decelerated to 1.5 percent from 4.2 percent.  On the other hand, Per capita PCE slowed down with a 2.0 percent growth from 2.4 percent.

With the continued demand for the services of our OFWs, Compensation Inflow registered 19.3 percent growth, a slight decrease from last year’s 22.3 percent. Property Income has been posting double-digit declines since Q2 2008 but the decline of 30.7 percent in Q3 2009 is lower than the 43.6 percent decline registered in Q3 2008. On the other hand, Property Expense continued to plummet with a 13.4 percent contraction from negative 8.1 percent last year. As a result, net factor income from abroad grew by 26.0 percent from 22.6 percent in 2008.

On the expenditure side, consumer spending decelerated to a cautious 4.0 percent growth from 4.4 percent a year ago. 

With the increased spending of government funds for infrastructure projects, Government Consumption Expenditure (GCE) grew, albeit slower, by 7.9 percent from the 11.8 percent growth recorded last year.

In spite of the growth of construction and BSODA, investments in Fixed Capital Formation in the third quarter of 2009 declined to 1.6 percent from a growth of 7.1 percent pulled down by decreased investments in Durable Equipment and heavy withdrawals from stocks.

Sustained public expenditure on capital outlay for Infrastructure investments by the government managed to maintain the growth of Public Construction from 23.4 percent to 22.2 percent growth resulting to a growth of Construction at 1.7 percent from 14.3 percent.  Meanwhile, Investments in Durable Equipment contracted to 5.7 percent from a growth of 1.0 percent a year ago as cutbacks in investments were recorded in fourteen (14) out of the twenty (20) types of equipment.  The third quarter decline in the investment in durable equipment was the fourth consecutive decline recorded.

Total Exports continued to plummet by 13.7 percent from a growth of 3.3 percent last year as both Merchandise and Non Merchandise exports declined.  The country’s total merchandise exports reversed its growth of 4.8 percent registered in 2008 to negative 14.6 percent.  Meanwhile, Exports of Non-Factor Services sank deeper to 8.4 percent from negative 4.3 percent recorded last year.

Total imports recovered from the slump of the first two quarters with 0.2 percent growth from 6.7 percent last year.  Total Merchandise Imports grew, albeit slower, by 1.4 percent from 5.3 percent while Imports of non-factor services reversed its growth from 28.2 percent to negative 13.6 percent in the third quarter of 2009.

Trade balance posted a deficit of 70.7 billion pesos.  The current trade surplus is 0.4 percent of GNP compared to last year’s negative 3.4 percent.  The terms of trade during the quarter posted a trade index of 102.8 percent.  Trading gains for the quarter amounted to 4,775 million pesos.

GNP Implicit Price Index (IPIN) stood at 535.9 percent from 535.7 percent in the previous year or 0.04 percent inflation.

Reference: National Statistical Coordination Board. "3rd Quarter 2009 National Accounts".