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THE
economy posted a 6.6-percent gross domestic product
(GDP) growth in the third quarter, lower than the
previous quarter’s all-time high of 7.5 percent,
according to data released by the National Statistical
Coordination Board (NSCB).
National
Economic and Development Authority (Neda) Acting
Director General Augusto Santos said this may be
attributed to the slight contraction in the exports
sector due to the slowdown in the economy of the
country’s top trading partner, the
United States.
The NSCB
said total exports in dollar terms increased to 6.5
percent. However, in peso terms, the total exports
plummeted to negative 4.9 percent from 9.2 percent last
year. The NSCB said this is the effect of the
appreciation of the peso.
Santos
admitted that the problems in the US economy as well as
the increasing oil prices are the two biggest threats to
the growth of the Philippine economy.
“Increasing oil prices reduce GDP growth. We are also
closely monitoring the slowdown of the
US
economy. The US is [our top] trading partner in terms of
exports and imports,” Santos told a news briefing in
Makati City Thursday.
NSCB
Secretary-General Dr. Romulo Virola said at the briefing
the slowdown was highlighted in the figures for the
seasonally adjusted GDP of the country for the quarter,
which posted a 0.3-percent decline compared which the
1.8-percent growth seen in the second quarter.
However,
he said that barring any threats, including the slowing
down of the agriculture, fishery and forestry (AFF)
sectors owing to the number of typhoons expected to
visit the country this year, Santos is confident a
7-percent growth is still possible in 2007.
Based on
data released by the government, GDP for the first three
quarters was at 7.1 percent. This is already above the
government’s official GDP target, set between 6.1
percent and 6.7 percent this year.
“With
growth generally spilling into the next quarter as
domestic demand strengthens, the Philippine economy
should be able to surpass the projected 2007 full-year
target of 6.1-percent to 6.7-percent growth,” Santos
said in his speech.
However,
former budget secretary and University of the
Philippines economist Prof. Benjamin Diokno said the
slower third-quarter growth of the country is only a
prelude to even slower growth in the fourth quarter of
2007, which is expected to spill over to 2008.
Diokno
said the fourth quarter may even post slower growth with
the appreciation of the peso, which dampens the
purchasing power of overseas Filipino workers and their
families; and the threat posed by high oil prices.
“For the
full year, the lower end of the target of 6.1 percent
may be achievable, but 7 percent is out of the question.
For 2008, around 6 percent to 6.5 percent for the full
year is possible,” Diokno said.
The
former budget secretary said that while the peso is
strong, it can only temporarily stop high oil prices and
control inflation. “The strong peso can dampen the
effects of high oil prices but not fully offset it,”
Diokno added.
He
explained that high oil prices will ultimately increase
transportation and utility costs. This means, Diokno
said, that households would have less money to spend for
other goods and would have a negative effect on the
primarily consumption-driven Philippine economy.
Apart
from these factors, Diokno said 2008 would generally be
a low-growth year since it is no longer an election year
and there would be some slowing down in the construction
expenditures of private firms. “The private sector will
soon feel the slowdown in the economy. They cannot build
[offices] forever,” Diokno said.
The
country’s GDP for the quarter was driven by trade,
agriculture and fishery, private services and
construction. On the demand side, the NSCB said growth
was driven by increased household spending, complemented
by increased investments in public and private
construction and a huge jump in exports of nonfactor
services.
The
continued accelerated growth in the net factor income
from abroad (NFIA) at 25.2 percent, the highest since
the third quarter of 2003, pushed the gross national
product (GNP) to a substantial 8.2-percent growth from
5.6 percent in the same quarter last year.
The
biggest contributor to growth was services, which
contributed 3.6 percent of the country’s GDP with a
7.2-percent growth, industry with a contribution of 2
percent and a growth of 6.1 percent, and AFF at 1
percent with a growth of 5.6 percent.
Virola
said the main contributors to the growth in services
were private services—includes the business-process
outsourcing industry—trade, finance, and ownership of
dwellings and real estate.
The
growth in industry was fueled by mining and quarrying,
manufacturing, construction and utilities. However, the
NSCB noted that manufacturing growth was pulled down by
lower demand for electrical machinery, metal products,
tobacco, rubber products and chemicals and chemical
products.
For the
AFF, the biggest contributors to growth were fishery,
corn and palay. The sector also marked an increase in
the contribution of bananas and agriculture services.
The
seasonally adjusted AFF slowed down this quarter with a
growth of 1.1 percent from 2.2 percent the previous
quarter; services also declined from 1 percent in the
second quarter to only 0.6 percent this quarter; and
industry contracted by 0.7 percent in the third quarter. |
