Economy expanded 3.8% in first quarter
30 May 2002 -- Domestic production of goods and services expanded in the first quarter, as indicated by a 3.8% growth in the Gross Domestic Product. The record was higher than the 2.9% increased posted a year ago. With a 22.5% increase in net incomes from abroad, Gross National Product rose to 4.9% from 3.4% in the same period last year.

By expenditure share, growth in domestic demand slowed down to 2.1% from 2.9%. Domestic demand is the total spending of consumers, government, and investors. Consumer spending slightly decreased to 3.4% from 3.5% last year, resulting from a slowdown in spending for beverages, tobacco, household furnishings, and miscellaneous items. Fuel, light and water consumption notably dropped 4.0% from a 3.9% growth rate. Among the other items consumers spend on, however, only transportation and communications registered a double-digit growth rate of 15.1%, accelerating from 8.6% last year. Spending on food, clothing and footwear, and household operations likewise grew at a faster pace over year-ago levels.

Public spending shrank 0.1% in the first quarter this year from a 0.3% growth last year as government put tighter reins in spending to contain the fiscal deficit. Despite the recovery of private construction investments to 6.0% from a 0.6% slump and the accelerated growth of investments in durable equipment to 2.9% from 0.7%, capital formation dipped 1.3% from a 1.9% growth a year ago. When viewed against the negative performance of the past three quarters, the 2.9% expansion in durable equipment can be taken as an indicator of a turnaround in business confidence.

Real volume of exports of goods and services contracted by 2.9% from an expansion of 5.4% a year ago. This stemmed from a reduction in merchandise exports. In particular, exports of semiconductors and electronic microcircuits, which constitute 39.7% of merchandise exports, continued to fall. The same trend was observed in the real volume of goods and services which declined by 4.1% from a 1.8% expansion a year ago.

In terms of the producing sectors, the services sector led first quarter growth at 4.8% from 4.6%. Within the services sector, the highest growth was exhibited by the combined transport, communication, and storgae subsector (9.7%), and wholesale and retail trade (5.3%). The services sector accounted for 53.8% of GDP.

Agriculture, fishery, and forestry production increased to 4.4% from 3.0%. Palay production, especially, turned around to an 8.8% growth from a contraction of 1.5%. Conversely corn production decelerated to a 2.9% growth from a growth of 6.8%. Overall, agriculture, fishery and forestry contributed 15.0% to GDP.

Industrial performance improved with a 1.9% growth from 0.6%. The extraction of crude oil from Malampaya carried mining and quarrying subsector to a 35.8% growth from a 13.8% slump. Manufacturing growth, meanwhile, decelerated to 2.0% from 3.2%. However, within manufacturing, food manufacturing and electrical machinery growth, recorded higher growths this year. The construction subsector recovered with increasing number of building permits after four past quarters of contraction.