Philippines: Economic growth slows in the first quarter
May 30, 2011
In the first quarter, GDP expanded 4.9% over the same period the year before. The reading came in below the 6.1% increase observed in the fourth quarter (previously reported: +7.1% year-on-year) and market expectations that had seen GDP growing at a faster rate of 5.1%. The slower pace of economic growth was partially associated with a base effect from Q1 2010, when government spending boosted GDP growth to 8.4%. Furthermore, this was also the first time when the national accounts were calculated using a new data series rebased to constant 2000 prices. As a consequence of the change in methodology, the full-year economic growth for 2010 was revised upwards to 7.6% from the previously estimated 7.3%. According to the Philippine National Statistical Coordination Board (NSCB), the weaker growth in Q1 mainly reflected government underspending as well as weak performance of the external sector. Government consumption declined a whopping 17.2% in the first quarter, down from a 6.6% contraction registered in the fourth quarter. Private consumption growth remained unchanged from the fourth quarter and added 4.9% in the first. Investment decelerated from growth of 16.1% in the fourth quarter to a 12.0% increase in the first quarter. Exports of goods and services decelerated to 3.3% (Q4: +16.8% yoy), while imports grew at a slower 8.8% pace (Q4: +21.9% yoy). As a result, the net contribution of the external sector to overall economic growth remained negative although improved slightly from minus 3.1 percentage points in the fourth quarter to minus 2.6 percentage points in the first. At the sector level, the quarterly reading was driven by growth of 7.2% in the industrial sector (Q4: +6.5% yoy) as well as in services, which added 3.7% (Q4: +6.4% yoy). The agricultural sector remained broadly stable, increasing 4.2% in the first quarter (Q4: +4.1% yoy). The government expects growth to remain within the 7.0 - 8.0% target for 2011.