Tuesday, February 1, 2011

GDP up by 7.3% in 2010

MANILA, Philippines – The Philippine economy, as measured by the gross domestic product (GDP), expanded by 7.3 percent in 2010, the highest in 24 years. The growth was achieved on the back of a strong foreign trade performance and election spending.
The last time the domestic economy grew at this pace was in 1986 following the restoration of democracy in the country after a bloodless People Power revolution that catapulted President Benigno S. Aquino III’s mother, Corazon C. Aquino to power.
The strong economic growth came during a period of peaceful political transition for the Philippines as Aquino easily won the presidential elections in May last year to succeed former President Gloria Macapagal Arroyo as the nation's leader.
Year-on-year comparison showed that GDP for 2010 grew by leaps and bounds as against the dismal 0.9 percent GDP performance in 2009, the country’s lowest in 11 years as the Philippines struggled amid the global financial crisis.
“From a low base in 2009, significant economic developments both from the supply and demand sides characterized output expansion in 2010. For instance, economic activities were geared toward higher value-added activities as industry outpaced the services and agriculture sectors,” Socio-economic Planning Secretary and National Economic and Development Authority (NEDA) Director General Cayetano Paderanga said.
Market players, on the other hand, traced the good economic performance to the trust and confidence in the new leadership. “This is an extension of the optimism that has followed the new government,” Radhika Rao, an economist at Forecast Pte in Singapore, said.
Aside from the optimism, Rao said the Bangko Sentral ng Pilipinas (BSP) managed to maintain benign inflation that has contributed to better spending trends and positive consumption.
BSP Governor Amando M. Tetangco Jr., so far, kept inflation below 5 percent in the past 21 months while holding the benchmark rate at a record low since July 2009.
“We had already incorporated a higher Q4 2010 growth rate than the official government target in our forecast exercise. So for purposes of our forecast path, the higher than market expectation GDP growth would not necessarily throw this off. Inflation remains manageable," Tetangco said.
"There is sufficient liquidity in the system to fund further growth. As long as the unwinding of funds kept with the BSP is orderly and such funds are channeled to productive uses, this should not necessarily be inflationary," Tetangco added.
Paderanga said the robust economic performance for 2010, which is well within the forecast of 7 to 7.4 percent, implies that the domestic economy could be on its way to a higher growth trajectory.
“We are happy to note that the 2010 economic performance bolsters confidence that the economy is on a path of strong recovery,” said Paderanga.
Malacañang is confident that the country’s quick economic growth will be sustained in the coming years due to the government’s ongoing social programs, overseas Filipino workers (OFWs) remittances, and foreign direct investments.
“First, the conditional cash transfers (CCT) and our social services, we’re banking on that to help keep our consumption buoyant; second, we continue to expect remittances from abroad; and third, we continue to expect to have more direct investments from investors outside of the country,” Deputy Presidential Spokesperson Abigail Valte said in a press briefing.
“All these three things taken together, we expect to help keep a healthy economy,” she added.
Paderanga noted that from a strong start of 7.8 percent in the first quarter, GDP growth sustained its momentum during the next three quarters of 2010 – 8.2 percent in the second quarter, 6.3 percent in the third quarter and 7.1 percent in the fourth quarter.
A broader measure, the country’s gross national product (GNP) in 2010 grew by 7.2 percent on account of the 6 percent growth in net factor income from abroad otherwise known as dollar remittances from overseas Filipino workers (OFWs). Compensation income from abroad grew relatively slower as the peso strengthened in 2010.
It was noted that OFW remittances overseas have not taken a hit after the global financial crisis and these things contribute to strong domestic demand.
The National Statistical Coordination Board (NSCB) cited the global economic recovery as a major contributor in the strong performance by helping to boost exports and revive key industries.
“The global economic recovery which resulted in record growth rates of foreign trade... contributed to an economic performance in 2010 that well surpassed the government's target of 5.0 percent to 6.0 percent,” NSCB, in a statement, said.
Renewed global demand for Philippine exports allowed industrial growth to accelerate to 8.3 percent in the final quarter of 2010, up from 3.8 percent during the same period the previous year, NSCB said.
Better weather towards the end of the year helped the struggling farming sector, pulling up the agriculture sector to a growth of 5.4 percent in the final three months of the year after storms and drought led to negative growth in the previous four consecutive quarters, NSCB said.
Only two typhoons hit the country compared to seven in the last quarter of 2009. The full-year agriculture, fishery and forestry (AFF) production remained subdued due to the lingering effects of the El Nino weather phenomenon in the first half of 2010 and contributed a negative 0.1 percentage point to GDP.
Other growth drivers include the services sector, which contributed 3.5 percentage points to GDP growth, boosted by the strong performance of trade and private services. This was complemented by flourishing domestic investment, strong growth of business process outsourcing, hotels and restaurants, wholesale and retail trade, and import and export trade. (With a report from Madel Sabater)

source: http://www.mb.com.ph

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