National Accounts, Q4 and Annual 2011

30 January 2012

Press Release

National Accounts, Q4 and Annual 2011

Philippine Economy Grew by 3.7 percent in Q4 2011

Amidst the obstinate exogenous economic woes, the government underspending on infrastructure in the second and third quarters and the sustained decline in fishing, the domestic economy grew in 2011 by a relatively feeble 3.7 percent compared to 7.6 percent in 2010. Net primary income declined by 0.9 percent pulling down GNI to a 2.6 percent annual growth from 8.2 percent last year.

The catch up government spending in the lastquarter and the resilience of the services sector helped cushion the impact of the slowdown in the Eurozone, the creeping economic recovery of the US and the typhoons towards the end of the year as GDP grew by 3.7 percent in the fourth quarter from 6.1 percent in the same quarter last year. From three consecutive quarters of decline, NPI recovered with 2.9 percent in the fourth quarter, nevertheless pulling down GNI growth to 3.5 percent from 5.6 percent.

On the demand side, growth of consumer spending doubled up to 6.1 percent during the year from 3.4 percent, but was not enough buffer for the decline in global trade and the moderated investments in fixed capital formation. In the fourth quarter, the sustained household consumption with 6.7 percent growth and the huge recovery of construction at 11.4 percent were partly negated by the continued drop in exports and the reduced addition to inventory.

The seasonally adjusted GDP grew by 0.9 percent slightly better than 0.8 percent in the previous quarter while the seasonally adjusted GNI accelerated to 1.7 percent from 0.9 percent growth in the third quarter, providing some indication that in the first quarter of the year of the dragon, it will indeed be more fun for the Philippine economy. Meanwhile, Agriculture, Hunting, Forestry and Fishing sector continues to face strong headwinds, declining anew by 1.2 percent from 3.7 percent in the previous quarter largely due to the contraction of Palay, Fishing, Other Crops and Corn. On the other hand, Industry accelerated to1.9 percent growth from 1.4 percent in the previous quarter due to the expansion of Construction and Manufacturing. Services sector, however, decelerated to 0.7 percent from 1.4 percent caused by the slow paced growth of all subsectors except for Public Administration Defense and Transportation, Storage & Communication.

With the weakened economic growth in 2011, per capita GDP slowed down to 1.8 percent from 5.6 percent in 2010. Likewise, per capita GNI decelerated to 0.7 percent from 6.1 percent. However, HFCE accelerated by 4.1 percent from 1.4 percent.

With the 3.7 percent GDP growth in the fourth quarter, per capita GDP decelerated to 1.8 percent from 4.1 percent while per capita GNI decelerated by 1.6 percent from 3.6 percent. In contrast, HFCE grew by 4.8 percent from 2.9 percent.

ROMULO A. VIROLA

Secretary-General, NSCB