Philippines: Economic growth slows for a fourth straight quarter
August 31, 2011
In the second quarter, GDP expanded 3.4% over the same period the year before. The reading came in below the 4.6% increase observed in the first quarter (previously reported: +4.9% year-on-year) and market expectations that had seen GDP growing at a faster rate of 4.1%. The slower pace of economic growth reflected the weakening of the global economy as well as supply chain disruptions stemming from the Japanese disasters. Economic growth has been decelerating for four consecutive quarters. Private consumption remained robust and added 5.4% in the second quarter (Q1: +5.3% yoy), while government consumption rebounded from a 17.2% decline in the first quarter to a 4.5% increase in the second. Investment, which grew 14.8% in the first quarter, fell 4.1% in the second due to a decline in public sector construction projects. Exports of goods and services contracted 0.3% (Q1: +2.0% yoy), while imports grew at a slower 4.1% pace (Q1: +11.3% yoy). As a result, the external sector's net contribution to overall economic growth remained negative although it improved from minus 4.5 percentage points in the first quarter to minus 2.3 percentage points in the second. At the sector level, the quarterly reading was driven by growth of 7.1% in the agricultural sector (Q1: +4.3% yoy) as well as in services, which added 5.0% (Q1: +3.2% yoy). On the other hand, the industrial sector contracted 0.6% in the second quarter (Q1: +7.3% yoy). The government expects growth to remain within the ambitious 7.0% - 8.0% target for 2011.