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HIGHLIGHTS
Second Quarter 2011
Philippine Economy decelerates with 3.4 percent GDP growth
Coming from a high base erected by election related expenditures last year, the domestic economy continued to decelerate, posting a 3.4 percent growth during the second quarter of 2011. This is less than half the booming 8.9 percent growth in 2010.
While buffeted by headwinds from the European debt crisis and the fragile recovery of trading partners, the less than desirable growth benefited from the robust rebound of the agriculture sector, the sustained though slowing down performance of manufacturing and the balanced growth of the ever-resilient services sectors.
On the demand side, the growth came mainly from consumer spending as fixed capital formation particularly Construction has not really felt the promise of the Public and Private Partnership program, while external trade has been lackluster at best.
With the seething political turmoil in the Middle East and North Africa plus the economic uncertainties in western countries, Net Primary Income (NPI) (previously called NFIA) declined by 2.8 percent retarding the Gross National Income (GNI) from 9.2 percent the previous year to 1.9 percent its lowest growth during the last four years.
On a seasonally adjusted basis, GDP grew by 0.6 percent while GNI grew by a slower pace of 0.4 percent in the second quarter of 2011. With the rebound of Sugarcane, Corn, and Palay, the Agriculture, Hunting, Forestry and Fishery sector posted 2.2 percent growth in the second quarter from 1.8 percent in the first quarter of 2011. Industry declined by 3.0 percent from a 3.1 percent gain in the previous quarter. The strong performance of the manufacturing sector ably supported by Mining & Quarrying was negated by the huge contraction of Construction and the decline of Electricity Gas & Water. Services sector posted a 2.4 percent growth for the second quarter of 2011 from 1.3 percent in the previous quarter, as all subsectors recorded positive growth.
With projected population reaching 95.6 million, per capita GDP grew by 1.5 percent but per capita GNI stood still while per capita HFCE grew by 3.5 percent.
PRODUCTION SIDE
Agriculture, Hunting, Forestry and Fishing
Agriculture rebounds
Agriculture, Hunting, Forestry and Fishing rebounded to 7.1 percent from a decline of 2.0 percent last year boosted by the strong growth posted by Agriculture with 10.3 from negative 1.7 percent. Agriculture was bolstered by the strong growth posted by Sugarcane, Corn and Palay. The major contributors to growth of the sector were Sugarcane, Palay, and Corn.
Sugarcane, Palay and Corn bolsters Agriculture growth
Sugarcane posted a triple-digit growth of 504.3 percent from negative 56.3 percent with the bountiful harvests in the second quarter in Negros Oriental, Iloilo, Capiz and Cebu provinces. Similarly,Palay recovered from its decline of 7.3 percent last year to a growth of 13.2 percent. The growth can be attributed to the expansion and recovery of harvest areas from the adverse effects of the El Niño phenomenon in 2010.
Likewise, Corn rebounded to 71.5 percent from a skid of 36.1 percent recorded last year. Significant gains in yield attributed to the use of hybrid varieties, sufficient water supply, increased fertilizer usage and better quality planting materials complemented by increases in area planted were recorded in Cagayan, Quirino Tarlac and Nueva Ecija provinces.
Meanwhile, Coconut including copra suffered a reversal of 3.5 percent from a growth of 0.9 percent, a consequence of the effects of long dry spell last year caused by El Niño. In addition, the incidence of pest and diseases was reported in Batangas, Zamboanga City, South Cotabato, Zamboanga Sibugay and Zamboanga del Norte.
Likewise, Mango, declined by 4.9 percent from a growth of 9.7 percent due to The frequent rains felt in Ilocos Region, Cagayan Valley, Central Luzon, Bicol Region, Western Visayas, Eastern Visayas and Caraga. In the same way, Banana contracted to 0.3 percent from a growth of 1.0 percent registered in 2010.
On the other hand, Pineapple upped its growth to 8.5 percent from 2.1 percent posted last year. This was due to the significant increases in area harvested in Northern Mindanao, SOCCSKSARGEN and Western Visayas in the second quarter of the year.
Coffee contracted by 2.1 percent from a meager growth 0.4 percent with the reluctance of farmers to invest in inputs like fertilizer while coffee prices were low. Continuous rain during fruiting stage also affected production in Caraga provinces.
Cassava sustained its growth with 5.7 percent from 8.1 percent as favorable weather conditions during the plant’s tuber development was reported in Quezon, Antique and Iloilo. Likewise, Rubber posted a modest growth of 6.1 percent from 3.7 percent, as farmers in North Cotabato were encouraged to do frequent tapping due to high prices of rubber in the market. . In Zamboanga Sibugay, the early recovery from the trees’ defoliation led to increased tappings.
Other Crops, however decelerated to 2.1 percent from 5.6 percent as most of the major crops except for Mongo, Cabbage and Tobacco under Other Crops suffered decreased production.
Poultry sustained its growth by 3.3 percent from its year ago growth of 8.1 percent due to the unceasing demand for chicken meat which encouraged more dressing of broilers in CALABARZON, Central Visayas and Northern Mindanao. Increasednumber of laying flocks as a result of additional commercial layer farms was also reported in CALABARZON.
Similarly, Livestock production grew by 1.2 percent from 3.5 percent posted last year. Cattle output increased with the sustained demand for beef encouraged slaughtering in Central Luzon, CALABARZON, Western Visayas, Central Visayas, Davao Region and SOCCSKSARGEN. Hog production also maintained its growth due to the increases in the number of fatteners and number of hogs slaughtered in Central Luzon, Central Visayas, Northern Mindanao and Davao Region.
Forestry down
For the fifth consecutive quarter, Forestry continued its decline, albeit lower, at 13.5 percent from 33.9 percent recorded the same period last year.
Fishing
Fishing plunged deeper with 2.6 percent from negative 1.6 percent recorded last year. Commercial and municipal fisheries output dropped during the period with the continued increases in prices of gasoline/oil and rough seas/unstable weatherresulting in lower number of fishing days and trips. The increased production in aquaculture was enough to push the growth of the fishing.
Industry
Industry declines
In Q2 2011, Manufacturing posted the fastest growth of 4.8 percent in the industry sector followed by Mining and Quarrying with 3.0 percent.
Construction, however, plunged to negative 16.1 percent, its worst performance in the last four years. Similarly, Electricity, Gas and Water Supply, declined by 2.0 percent.
Nickel and Crude Oil sustains growth of Mining and Quarrying
Mining and Quarrying posted a modest growth of growth of 3.0 percent from 24.4 percent in the previous year, largely contributed by the production of Nickel and Crude Oil, Natural Gas & Condensate with 6.6 percent from a double-digit growth of 92.7 percent and 2.6 percent from negative 3.3 percent respectively. Other contributors to growth were: Other Non Metallics, grew by 5.5 percent from 55.5 percent; Copper Mining, 16.9 percent from negative 0.2 percent; Other Metallic Mining, 71.9 percent from negative 9.6 percent; Gold Mining, 0.7 percent from 59.2 percent; and, Chromium Mining, 0.1 percent from 22.2 percent.
Meanwhile, Stone Quarrying and Sand Pits pulled down the growth of the sector with a decline of 10.7 percent from a growth of 31.9 percent.
Manufacturing sustains growth
The Manufacturing sector grew, albeit at slower pace, by 4.8 percent from 13.2 percent last year. The top five contributors to the growth of the sector were: Food manufactures with a share of 37.6 percent of the total manufacturing sector, rebounded to 14.2 percent from a decline of 1.5 percent; Miscellaneous Manufactures, 29.9 percent from 34.9 percent; Furniture and Fixtures, 45.0 percent from 14.2 percent; Beverage, 14.1 percent from 11.5 percent; and, Chemical & Chemical Products, 3.5 percent from 16.7 percent.
On the other hand, the reversals in the following subsectors pulled down the growth of the sector: Radio, Television and Communication Equipment & Apparatus, 4.4 percent from a growth of 47.1 percent; Transport Equipment, 20.4 percent from 39.0 percent; Machinery and Equipment except electrical, 23.1 percent from 39.4 percent; Office, Accounting and Computing Machinery, 23.8 percent from 1.5 percent; and, Basic Metals, 14.0 percent from 15.8 percent.
Construction tumbles down
Construction declined by 16.1 percent from a growth of 24.7 percent recorded last year with the reversal in growth of Public Construction and the deceleration of Private Construction.
Electricity, Gas and Water Supply declines
Electricity, Gas and Water Supply declined by 2.0 percent from 10.2 percent with the reversal of Electricity and water by 2.5 percent from a growth of 11.2 percent and 0.3 percent from 4.0 percent in the second quarter of 2011. The growth of Steam by 2.9 percent from 4.4 percent was not enough to cushion the decline of the sector
Services
Services maintains growth
For the second quarter 2011, the Services subsectors posted relatively balanced growths, with the fastest growths coming from the following: Financial Intermediation [9.9%]; Public Administration and Defense; Compulsory Social Security Other Services [7.3%]; Other Services, [5.8%]; Real Estate, Renting and Business Activities [5.7%]; which now includes BPOs; and, Transport, Storage and Communication [5.3%].
On the other hand, the weakest growth in Services came from Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods with [1.2%].
Transportation, Storage and Communication expands
Transport, Storage and Communication grew modestly by 5.3 percent from 2.2 percent posted last year. The expanded growth of the sector can be attributed to the robust performance of Transport and Storage which recorded a growth of 8.3 percent from 1.7 percent. Likewise, Communication expanded to 3.5 percent from 2.5 percent.
The accelerated growth of Transport and Storage can be attributed to the upswing growth of Storage and Services incidental to Transport, 14.9 percent from 9.3 percent and Land Transport, 7.3 percent from negative 4.3 percent. Meanwhile, Water sustained its growth by 4.8 percent from 18.4 percent while Air, 3.8 percent from 8.6 percent.
Trade growth weakens
Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods (used to be referred to as Trade) grew meagerly by 1.2 percent from 6.8 percent with the deceleration of Retail Trade by 3.1 percent from 7.8 percent.
On the other hand, Wholesale Trade and Maintenance & Repair of Motor Vehicles, Motorcycles, Personal & Household Goods pulled down the growth of the sector with a decline of 7.7 percent from a 2.4 percent growth and 4.5 from a growth of 6.7 percent.
Financial Intermediation Services expands
Financial Intermediation services accelerated its growth to 9.9 percent from 5.8 percent posted last year with the double digit growth recorded by Non Banks Financial Intermediation and Insurance at 18.3 percent from 4.0 percent and 5.6 percent to 10.4 percent, respectively.
On the other hand, Banking Institutions and Activities Auxiliary to Financial Intermediation sustained their growth at 3.1 percent from 8.3 percent and 6.1 percent from negative 0.3 percent, respectively.
Real Estate, Renting & Business Activitiesdecelerates
Real Estate, Renting & Business Activities (formerly Ownership of Dwellings andReal Estate) continued to grow by 5.7 percent from 8.6 percent in the previous year. The decelerated growth of the sector can be attributed to the slow down of Real Estate and Business Activities which includes Business Process Outsourcing (BPO) by 11.8 percent from 25.2 percent and 7.0 percent from 10.4 percent, respectively. On the other hand, Ownership of Dwellings accelerated by 2.0 percent from 1.5 percent.
Education tops Other Services
Other Services sector posted a growth of 5.8 percent from 10.9 percent recorded last year. The highest contributor to the growth of the sector was: Education with a decelerated growth of 7.2 percent from 7.4 percent. The other contributors to the growth of the sectors were: Hotels and Restaurants, 8.1 percent from 10.0 percent; Health and Social Work, 5.7 percent from 10.7 percent; Recreational, Cultural and Sporting Activities, which include the broadcasting media, 1.8 percent from 28.1 percent; and, Sewage and Refuse Disposal Sanitation and Similar Activities, 9.6 percent from 9.7 percent.
On the other hand, Other Service Activities declined, albeit slower, by 1.5 percent from negative 2.3 percent.
Public Administration and Defense sustains growth
Public Administration & Defense; Compulsory Social Security grew by 7.3 percent from 9.6 percent with the release of third tranche of the salary increase as mandated by the Salary Standardization Law III.
EXPENDITURE SIDE
Consumer spending accelerates
Household spending continued to expand in the second quarter of 2011 by 5.4 percent from 1.9 percent last year.
Food expenditures, which accounted for 42.1 percent of the sector, grew by 6.6 percent from 1.7 percent registered in 2010. The other expenditure items that recorded higher growths compared to the previous year were: Miscellaneous goods and services, 11.4 percent from 2.3 percent; Furnishings, household equipment and routine household maintenance, 8.4 percent from 2.4 percent; Restaurants and Hotels, 6.7 percent from 3.8 percent; Education, 6.8 percent from negative 0.3 percent; Communication, 3.8 percent from 2.7 percent; Transport, grew by 1.6 percent from 3.8 percent; Health, 6.2 percent from 1.1 percent; Clothing and Footwear, 1.2 percent from 2.9 percent; and, Recreation and Culture, 0.4 percent from 0.5 percent.
On the other hand, the following expenditures posted reversal in growth: Alcohol, Beverage & Tobacco, 0.7 percent from a growth of 1.1 percent; and, Housing, water, electricity, gas & other fuels, 0.3 percent from 0.5 percent.
Government Final Consumption Expenditure (GFCE) decelerates
Government Final Consumption Expenditure decelerated by 4.5 percent from 7.4 percent in the second quarter of 2011. The growth, however, was higher compared with the first quarter due to release of allotments to different departments/agencies to facilitate the implementation of their programs/projects.
Investments in Fixed Capital Formation declines
Investments in Fixed Capital Formation in the second quarter of 2011 declined by 5.7 percent from 26.6 percent in the same period last year.
Construction slumps
Total investments in Construction slumped by 13.5 percent from a growth of 25.2 percent recorded last year pulled down by the decline in Public Construction at 51.2 percent from a growth of 27.0 percent.
Investments in Private Construction, which decelerated by 19.0 percent from 23.7 percent, were not enough to haul up the growth in the Construction sector.
Investments in Durable Equipment sustains growth
Investments in Durable Equipment maintained its growth, albeit at a slower pace, at 2.2 percent from 35.9 percent a year ago. Increased investments were registered in thirteen (13) out of the twenty (20) types of equipment.
Increases in investments were noted in the following: Telecommunications & Sound Recording/Reproducing Equipment, 21.2 percent from 28.8 percent; Other Miscellaneous Durable Equipment, 22.4 percent from 3.4 percent; Other Electrical Machinery & Apparatus, 14.0 percent from 190.3 percent; Other General Industrial Machineries, 17.8 percent from 31.2 percent; and, Other Special Industrial Machineries, 9.4 percent from 54.6 percent.
Meanwhile, declines were noted in the following subsectors: Road Vehicles, 27.8 percent from a growth of 38.0 percent; Air Transport, 45.0 percent from a growth of 69.6 percent; Aircon & Refrigeration Equipment, 8.1 percent from 42.8 percent; Railway Transport, 94.6 percent from negative 31.6 percent; and, Sugar mill Machineries, 87.6 percent from a triple digit growth of 108.7 percent.
Investments in Breeding Stocks and Orchard Development decelerates
Capital formation for the combined Breeding Stocks and Orchard Development for the second quarter of 2011 decelerated to 0.7 percent from 1.0 percent as expenditures in Breeding Stocks maintained its growth during the period.
Inventory increases
Total addition to total inventory for the second quarter of 2011 amounted to P 7,215 billion compared to the withdrawal of P 12,517 billion in the previous year as most of its subsectors posted additions particularly in the inventories of Other Establishments, Crude and Petroleum Products.
Total Exports declines
Total Exports declined by 0.3 percent from 24.0 percent last year with the deceleration of Exports of Goods and the reversal of Export of Services.
Exports of Goods sustains growth
The country’s total Exports of Goods grew by a measly 0.1 percent from 28.6 percent in 2010 with the decline of Principal Goods for Export, i.e. Electronic Components, Agricultural Products, Fishery Products, etc., by 15.3 percent from 28.4 percent. Others, on the other hand, cushioned the slow down of the sector with 43.5 percent from 29.3 percent.
The top five contributors to the growth of Exports of Goods were: Automotive Electronics, grew by 197.1 percent from negative 29.5 percent; Petroleum Products, 260.9 percent from negative 37.2 percent; Sugar, 532.6 percent from negative 60.9 percent; Cathodes & Sections of Cathodes of Refined Copper, 82.2 percent fromnegative 37.9 percent; and, Bananas, including Plantains, Fresh or Dried, 85.2 percent from negative 26.1 percent.
Growth of Exports of Goods was pulled down by the decline of the following commodities: Components/Devices (Semiconductors), 18.4 percent from 38.9 percent; Electronic Data Processing, 19.0 percent from 10.3 percent; Communication/Radar, 57.1 percent from 79.8 percent; Ignition Wiring Sets, 27.9 percent from 51.8 percent; and, Consumer Electronics, 51.5 percent from negative 6.7 percent.
Export of Services down
Exports of Services declined by 2.2 percent in the second quarter of 2011 from 6.2 percent the same period last year. Contributing to the decline of the sector were: Miscellaneous Services which declined by 5.9 percent from 6.6 percent; Transportation, 19.0 percent from a growth of 17.8 percent; Government Services 8.5 percent from negative 6.2 percent; and, Insurance, 7.9 percent from a triple digit growth of 290.5 percent.
On the other hand, Travel grew by 24.2 percent from 1.1 percent.
Total Imports slows down
Total imports slowed down byl with 2.7 percent from a growth of 22.1 percent with the decline of Imports of goods.
Imports of Goods decelerates
Total Imports of Goods decelerated by 1.1 percent from a growth of 23.8 percent as Principal Import Goods contracted by 12.0 percent from 18.2 percent. The growth of Imports on Consignment and Others at 39.9 percent from 48.7 percent and 18.8 percent from 27.2 percent, respectively were not enough to push up the growth of the sector.
The overall performance of Principal Import Goods was pulled down by the decline and further decline of the following: Components/Devices (Semiconductors), 23.6 percent from 32.8 percent; Cereals, 56.9 percent from negative 4.0 percent; Mineral Fuels, 16.8 percent from 2.8 percent; Transport Equipment, 13.0 percent from 42.5 percent; and, Electronic Data Processing, 9.9 percent from negative 6.0 percent.