Fourth Quarter 2010
Annual GDP Sizzled to its Highest Growth Rate in the Post Marcos Era
at 7.3 Percent; Q4 2010 GDP grew by 7.1 percent
Posted 31 January 2011
Despite the El Niño and the diminished government spending during the second semester, the domestic economy sizzled to its highest annual GDP growth in the post Marcos era of 7.3 percent in 2010 from 1.1 percent in 2009. The global economic recovery which resulted in record growth rates of foreign trade and election related stimuli that combined for a record first semester growth, followed by the peaceful conduct of the national elections and the renewed trust in government contributed to an economic performance in 2010 that well surpassed the government’s target of 5.0 percent to 6.0 percent. Industry and services sectors expanded strongly in the last quarter of 2010 while Agriculture recovered after four consecutive quarters of decline due to El Niño, pushing GDP to grow by 7.1 percent in Q4.
With the prevailing sanguine outlook of both business and consumers, the economic prospects for 2011 are indeed exciting.
On the demand side, increased consumer spending for the whole year buttressed by increased investments in Fixed Capital Formation posting its highest growth rate since 2000, particularly in Durable Equipment and sustained by the double digit growth in international trade contributed to the record GDP growth in 2010.
Likewise, annual GNP accelerated by 7.2 percent from 4.0 percent last year in spite of the weakened growth in NFIA from 28.0 percent in 2009 to 6.0 percent. For the fourth quarter, the continuing, though much decelerated demand for the services of our OFW’s caused NFIA to grow by 3.8 percent from 19.5 percent last year, pushing GNP growth to 6.7 percent from last year’s 4.1 percent.
The seasonally adjusted estimates show a surging Philippine economy as GDP jumped by 3.0 percent from a decline of 0.8 percent in the previous quarter while the seasonally adjusted GNP accelerated to 2.9 percent from 0.2 percent growth in the third quarter.
With the record pace of economic growth in 2010, per capita GDP rose by 5.3 percent from a decline of 0.9 percent in 2009. Per capita GNP and per capita PCE likewise posted huge growths of 5.1 percent and 3.3 percent from 2.0 percent and 2.1 percent, respectively.
Growth of Major Economic Sectors
In 2010, Industry once again took the driver seat in boosting the economy with its huge 12.1 percent growth from a decline of 0.9 percent the previous year. Services provided more than able support as it grew by 7.1 percent from 2.8 percent. However, Agriculture, hounded by El Niño, posted a negative 0.5 percent from zero growth in 2009.
For the 4th quarter of 2010, Industry accelerated to 8.3 percent from 3.8 percent, almost sustaining its third quarter growth. Services likewise accelerated, growing by 6.9 percent from 3.1 percent. And AFF, after being battered for four consecutive quarters by abnormal weather conditions, rebounded by 5.4 percent from a decline of 2.9 percent.
Of the 7.3 percent growth in GDP for the whole year of 2010, 3.9 percentage points came from Industry and 3.5 percentage points came from Services while AFF pulled down the growth with negative 0.1 percentage point.
In the fourth quarter, the 7.1 percent growth in GDP came from Services, with 3.3 percentage points; Industry, 2.7 percentage point and AFF, 1.0 percentage point.
The seasonally adjusted AFF sector grew by 4.2 percent from a 1.0 percent growth in the previous quarter largely due to the growth in Palay and corn. On the other hand, Industry rebounded to a 6.7 percent growth from a 5.9 percent decline in the previous quarter due to the expansion of Manufacturing and Mining & Quarrying. Services sector, however, decelerated to 0.3 percent from 2.0 percent caused partly by two consecutive quarters of decline in Government Services.
On the demand side, all expenditure items registered accelerated growths in 2010 with Total Exports, Total Imports and Capital Formation rebounding to 25.6 percent, 20.7 percent and 17.0 percent from a decline of 13.4 percent, 1.9 percent and 5.7 percent, respectively. Likewise, consumer spending accelerated to 5.3 percent from4.1 percent. However, government spending decelerated to 2.7 percent from 10.9 percent.
For the fourth quarter, all expenditure items likewise registered positive growths, except Government Consumption Expenditure which declined by 7.6 percent. Personal Consumption Expenditure accelerated to 7.0 percent, the highest since the 8.4 percent growth recorded in the third quarter of 1988, from 5.0 percent in the same period last year. Investments in Fixed Capital Formation grew robustly with 22.8 percent, the highest since the 27.3 percent of the fourth quarter 2000, from last year’s growth of 5.8 percent as a result of accelerated investments in Durable Equipment. Total Exports expanded by 21.1 percent from a decline of 6.7 percent as both Merchandise Exports and Non Merchandise Exports posted robust growths. And, Total imports accelerated to 21.8 percent from 6.8 percent in the previous year as both Merchandise Imports and Non Merchandise imports recorded double-digit growths.
ROMULO A. VIROLA
Secretary General, NSCB