GDP growth slows to 4.9% in 1st quarter

MANILA, Philippines – The economy grew by a lower-than-expected 4.9 percent in the first quarter of the year due to a drop in global trade and government underspending on infrastructure.

The National Statistical Coordination Board (NSCB) said gross domestic product (GDP) growth in the three months to March was lower than the 8.4 percent rise posted in the same period last year, when economic activity was boosted by election-related spending.

The first quarter figure was also below the 5.1 percent median forecast in a previous poll of economists, and was near the low end of the government’s projection of 4.8 percent to 5.8 percent growth, based on the 1985 price series.

“Underspending by the government and the slowdown in global trade constricted the economy to a lower growth of 4.9 percent in the first quarter,” NSCB Secretary-General Romulo Virola said in a statement.

On a seasonally adjusted basis, the economy expanded by 1.9 percent in the March quarter from the previous three months, after growth of 0.5 percent in the fourth quarter of 2010, which was recalculated with 2000 as base year.

Overall growth in the previous years have been revised using 2000 as base. Earlier this month, the government said expansion in 2010 was 7.6 percent under the new data series compared with 7.3 percent under the old.

The government is aiming for a full-year GDP growth rate of 7 percent to 8 percent this year, a goal it set before the political unrest in the Middle East and North Africa erupted, and Japan’s earthquake, tsunami and nuclear disasters.

NSCB reported that gross national income (GNP), which includes income from abroad, expanded 3.6 percent in the first quarter from 11.5 percent last year. The drop was partly due to crisis in the Middle East and North Africa, key sources of remittances from overseas-based Filipino workers, as well as the appreciation of the peso against the dollar.

For his part, Socioeconomic Planning Secretary Cayetano Paderanga Jr. said the first quarter performance was within the National Economic and Development Authority (NEDA) forecast of 4.8 percent to 5.8 percent for the first three months of the year.

Paderanga said that agriculture, hunting, forestry and fishing rebounded by 4.2 percent from a contraction in the same period last year.

“This was mainly due to increased yield, expansion in harvest areas and full milling operations in major producing areas of palay, sugarcane, and corn. Meanwhile, the high demand for chicken meat both from households and fast food chains helped push poultry production,” the Socioeconomic Planning chief said.

Similarly, the industry sector grew by 7.2 percent growth, supported by the expansion in manufacturing, construction, and mining and quarrying.

The services sector, which remains as the largest contributor to GDP with 55 percent share, grew by 3.7 percent on account of other services, real estate, transport, storage and communication, and finance, Paderanga also said.

However, Paderanga said that for the government to meet the seven percent to eight percent growth target for the year, the implementation of appropriate policies supportive of growth must be undertaken.

“To have a stronger growth in the coming quarters in spite of the risks and uncertainties surrounding the country, the timely and effective implementation of appropriate policies and reforms will be undertaken. These include measures such as addressing corruption and making the bureaucracy more efficient by streamlining processes to lower the cost of doing business for the private sector as well as expediting the release and utilization of budget for a more efficient timely implementation of programs and projects,” Paderanga said.

He also said the interagency Development Budget Coordination Committee (DBCC) would be reviewing the 2011 growth goal of seven percent to eight percent.

However, Paderanga was mum on whether or not NEDA would recommend a downward adjustment in the growth projection for the year.

Had the government spent more during the period, NSCB’s Virola said the economy would have grown a faster pace of 5.1 percent. –Iris C. Gonzales (The Philippine Star)