4th Quarter 2001 Economic Review
GDP is estimated to have expanded by at least 3.3% in the fourth quarter of 2001 from an average 3.1% growth in the first three quarters. Given this, overall GDP growth for 2001 is expected to be 3.2%.

Agriculture, fisheries, and forestry should have grown by a record 6.4% as good weather, government support, and the use of certified seeds boosted production of palay and corn. This was faster than the cumulative 2.9% growth posted in the first three quarters of 2001. The sector employed 11.3 million or 37.4% of the labor force. Agriculture, fishery and forestry provided 272,000 new jobs in the labor market in October. Good harvest kept food prices relatively stable. Combined with the impact of fuel price reductions in the last quarter, consumer inflation rate slowed down to 4.6% in the fourth quarter from 5.8% in the same quarter in 2000.

Industry was expected to slow down from its 2.1% expansion in the first three quarters. Manufacturing output contracted further by 10.1% in October. Furthermore, average capacity utilization of firms fell to 76.9% from 91.2% a year ago. November and October exports already shrunk by 17.1% compared to a 2.8% growth in the previous year. October imports fell 16.9% from 9.2% growth a year ago. Employment in manufacturing declined by 43,000 in October to 2.9 million jobs as a result of export slump because of the recession in the US and Japan. On the other hand, the construction industry showed slight growth as 14,000 new jobs were created in October.

Services was also expected to decelerate to around 3.7% from its 4.0% growth in output in the first three quarters of the year. In the financial sector, nonperforming loans of commercial banks have deteriorated to a high of 18.8% in end-October and end-November. Despite the decline of the average 91-day T-bill rate to 9.4% in the last quarter from 12.9% a year ago, loan growth was negative as of October. Nevertheless, services accounted for 14.2 million jobs or 47.0% of the employed workforce and created 2.1 million jobs in October. Overall, unemployment rate eased to 9.8% in October compared to 10.1% in October 2000.

The peso-dollar exchange rate depreciated by 5.2% to average P51.84/US$ in the last quarter. Overseas remittances in October expanded by 30.2% to US$617 million from US$474 million last year. Thus, fourth quarter GNP growth might have reached 3.7% -- the same as the average in the first three quarters.