Statement of Sec. Paderanga on the Q1 2011 National Income Accounts

Ladies and gentlemen, good morning.

The first quarter performance of the economy is well within expectations. Real GDP growth moderated to 4.9 percent coming from a very high growth in 2010 that was due to a slump in the previous year. This growth is within the NEDA’s 4.8 to 5.8 percent forecast. However, with net primary income posting a flat growth, the country’s gross national income or GNI grew by 3.6 percent.

Compared with the performance of our Asian neighbors, our first quarter growth is higher than that of Thailand’s 3.0 percent, Republic of Korea’s 4.2 percent and Malaysia’s 4.6 percent. It is, however, lower than Vietnam’s 5.4 percent, Indonesia’s 6.5 percent, Singapore’s 8.3 percent and China’s 9.7 percent. The economy posted a respectable growth amidst the geopolitical tensions in the Middle East and North Africa, the rising oil prices, and the contraction in public spending.

On the supply-side, growth was supported by the strong turnaround of agriculture and the robust expansion of industry.

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, expansions 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 industry sector’s 7.2 percent growth was supported by the expansion in manufacturing, construction, and mining and quarrying. Manufacturing continued to strengthen, benefitting from the good performance of both food manufactures and electronics-related industries. Construction was primarily led by the private sector. Public investment on infrastructure contracted as department/agencies became more careful or thoughtful in executing their budgets, assessing cost assumptions of programs and projects, as well as in streamlining their systems and processes to improve fund absorption. Meanwhile, higher global prices of metals bode well with mining and quarrying considering the gains of both metallic and non-metallic industries.

On the other hand, 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. Turning to the demand side, the recovery of household spending to pre-crisis trend and the surge in investments supported growth. The observed slower growth rate of per capita real GDP at 2.9 percent compared to 6.4 percent in the same period last year indicate that improvement in household material welfare. Nevertheless, it is worth noting that the expansion in investments was due to purchases of durable equipment and capital stock while intellectual property products showed growth together with construction.

Thus, 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. We also expect that the uncertainty brought about by the tsunami and earthquake in Japan will normalize in the coming months. We hope that we could be of assistance in the rehabilitation and reconstruction efforts. Moving towards normalization in the Middle East and North Africa will also be beneficial to growth even as adjustment programs are being undertaken by us.

For this reason, we are glad to announce that the Philippine Development Plan (PDP) 2011-2016, product of multi-stakeholder consultations, is now available on the NEDA website. The Plan contains the blueprint or the framework which the country should pursue in order to achieve an inclusive growth or improved welfare for all Filipinos.

You may recall that in the January 2011 round of the Labor Force Survey, the country’s unemployment rate slightly increased to 7.4 percent, from 7.3 percent in the same period in 2010. This unemployment rate remains as the greatest challenge for the country, together with high rate of poverty incidence. The ongoing political tensions in Middle East and North Africa (MENA), the still uncertain movements of world oil prices, and other worldwide economic developments and how we, as a country, respond to them are all important to the Philippines’ economic performance in the succeeding quarters.

In closing, we are all challenged to contribute in moving our country forward. It is, of course, imperative that the government guarantees the successful attainment of the commitments in the PDP 2011-2016. However, the government cannot do such gargantuan tasks alone. Indeed, it is the sustained support of the all agents in the economy: the government—the executive, Congress and the judiciary, the business sector, civil society, academe, various organizations, and every individual in this country. We should unite and lift our feats to a higher ground so that we can bring our country to a higher level of development and eventually prosperity for all.

Thank you.
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