GDP grows 7.3% after low 1.1% base in 2009

The so-called low base factor coming from a slim 1.1 growth in 2009 coupled with spending related to the national elections in May last year and the dependably strong remittance from Filipinos working abroad mostly contributed to a 7.3 percent growth last year, the fastest pace in more than three decades, government data showed.

National Statistical Coordination Board (NSCB) secretary general Romulo Virola said despite the El Niño weather disturbance and diminished government spending during the second semester, the domestic economy, as measured by gross domestic product (GDP), “sizzled to its highest annual GDP growth in the post Marcos era of 7.3 percent in 2010 from 1.1 percent in 2009.”

Socio-economic Planning Secretary Cayetano Paderanga, however, said growth was the result of the economy coming from a low base in 2009.

He added, however, economic activities geared toward higher value added activities such as industry, which outpaced the services and agriculture sectors, contributed to growth.

He said the industry share in total growth was 3.9 percentage points on the back of brisk manufacturing, particularly electrical machinery, petroleum and coal products, and food. This is consistent with the strong pick-up in domestic demand and the rebound in external trade.

Paderanga added full year growth of the services sector remained firm.

“It contributed 3.5 percentage points to GDP growth, boosted by the strong performance of trade and private services. This was complemented by flourishing domestic investment, strong growth of business process outsourcing, hotels and restaurants, wholesale and retail trade, and import and export trade,” he said.

The agriculture sector’s 5.4 percent fourth quarter growth performance is attributed not only to the harvest season but also to fewer typhoons.

Only two typhoons hit the country compared to seven in the last quarter of 2009. Nonetheless, full year agriculture, fishery and forestry (AFF) production remained subdued due to the lingering effects of the El Niño weather phenomenon in the first half of 2010 and contributed a negative 0.1 percentage point to GDP, Paderanga said.

Domestic demand, fed mainly by money sent in by Filipinos working abroad, continued to be an important growth engine for the economy in 2010.

However, while personal consumption expenditures remained as the primary growth driver, investments also provided a strong support to growth, Paderanga added.

Private sector investment in construction and in machinery and equipment resulted in a robust 17 percent growth in gross domestic capital formation.

This supported the healthy pace of growth in manufacturing and services, he said.

Private businesses responded well to brisk lending activities by banks offering low interest rates and to the relatively low inflation environment.

While private consumption remained stable in the first three quarters, there was a significant push in the fourth quarter largely due to strong spending on food, household furnishings and clothing.

On the back of this strong growth performance is the buoyant business and consumer confidence, consistently registering an all time high based on surveys conducted by the Bangko Sentral ng Pilipinas in 2010, Paderanga said.

Over the next six years, we are looking forward to a sustained strong economic performance, he said.

The 2010 GDP growth was the highest since 1975 at 8.8 percent and surpassed the government’s target of between 5 and 6 percent.

Virola attributed last year’s strong GDP growth to the global economic recovery, higher foreign trade, election-related spending and the peaceful national elections.

Paderanga said the government is targeting a seven to eight-percent GDP growth this year until 2016 to reduce poverty in the country. –Ayen Infante, Daily Tribune