Service sector generates 1.1M new jobs; Q1 growth a surprise at 6.4%…

…Tops Asian average of 3.7%…

The Philippine economy grew 6.4 percent during the first quarter, the highest in Asia except for China.

National Economic and Development Authority (NEDA) director general Arsenio Balisacan said growth was high enough to generate 1.1 million new jobs for the quarter.

The bulk of the new jobs came from the services sector – tourism and business process outsourcing (BPO) – which accounted for close to half of the gross domestic product.

With more employed and more money coming from remittances and tourism, consumption rose 4.9 percent. While consumption grew fast enough to propel growth, it was still lower than the 7.7 percent growth posted during the election year of 2010.

Balisacan said that with the first-quarter growth higher than expected, the whole year target of 5 to 6 percent may be exceeded.

Balisacan said the first-quarter growth leads the Asian average of 3.7 percent.

The Philippines grew faster than Indonesia (6.3 percent), Vietnam (4 percent), Singapore (1.6 percent), and Thailand (0.3 percent), Balisacan said.

The growth was also higher than that of Hong Kong (0.4 percent), South Korea (2.8 percent), and Japan (2.8 percent), but lower than China’s 8.1 percent.

Balisacan said growth was supported by accelerated government spending, low prices that supported household consumption, better-than-expected exports performance, continued credit expansion, sustained robustness of remittances, expansion in the tourism sector, increased business and consumer confidence, and an overall buoyant domestic economic outlook.

The services sector, which was the main driver of growth, increased 8.5 percent, the highest quarterly growth since the third quarter of 2004, NSCB secretary general Romulo Virola said.

“Supporting the growth in the services sector is the 1.15 million tourist arrivals, which provided additional boost to tourism-related services,” Balisacan said.

Virola said that the industry sector seems to have recovered from its unimpressive performance in the past three quarters, as it grew 4.9 percent.

The agriculture sector, on the other hand, posted a minimal growth of 1 percent.

On the demand side, household final consumption expenditure grew 6.6 percent on the back of improved employment conditions and a generally low and stable price levels in the first quarter, Balisacan said.

“Robust government consumption (24 percent) was driven by the strong momentum in spending for maintenance and other operating expenditures of the government,” the NEDA chief said.

“At the same time, the government will not let up in its efforts to accelerate the growth of the economy,” he said.

Balicasan said that there is still room for faster acceleration in government spending. He also said that the government will remain vigilant on the risks to growth, including those posed by the euro area woes and the uncertainties in the world price of oil. –ANGELA CELIS, Malaya