MANILA, Philippines—(UPDATE) The rate of rise of the country’s economy in terms of gross domestic product (GDP) slowed down considerably to 4.9 percent in the first quarter, from the 8.4 percent seen in the same period in 2010, due to lower government spending and a volatile global economy.
In its report, the National Statistical Coordination Board (NSCB) also said that GDP growth in the first quarter was slower compared with the 6.1 percent rise seen in the fourth quarter of 2010.
“Underspending by the government and the slowdown in global trade constricted the economy to a lower growth in the now 2000-based GDP of 4.9 percent in the first quarter, from the election stimulated 8.4 percent last year,” NSCB’s Romulo A. Virola said during a briefing.
Romulo was referring to the recent government decision to change the benchmark with which to base critical estimates from 1985 prices to 2000.
Also, the NSCB head cited the shot in the arm the economy received from last year’s election-related spending.
The challenge in the coming quarter is how to sustain the modest growth seen in the first three months of 2011, Virola said.
But according to Economic Planning Secretary Cayetano Paderanga Jr., the lower rate of GDP growth in early 2011 is “well within expectations.”
Economists interviewed by the Inquirer said they were not surprised by the official figures.
Most economists’ first quarter projections forecasts averaged at about 5 percent.
Benjamin Diokno, former budget secretary and an economics professor at the University of the Philippines, said the slowdown was expected, and indicated that the full year outlook “is not rosy.”
“The government’s full year target growth of 7 to 8 percent now appears to be unreachable,” he said in an e-mail.
Diokno also noted that the 2011 GDP growth would be lower because of “base effects”—something that would normally occur after an economy experienced rapid expansion the previous year.
That was what happened in 2010, which saw massive election spending and abnormally strong public sector expenditures to complete various projects.
Still, the government is keeping its 7 to 8 percent target, and will look at “how to accelerate spending” for the rest of the year, Paderanga said.
The NSCB said the modest GDP rise was due to the sustained growth of manufacturing, supported by “other services,” real estate and business activities, as well as the recovery of agriculture from a first-quarter slump in 2010.
On the demand side, the NSCB said, growth came mainly from increased investments in fixed capital formation, particularly durable equipment and household spending.
As a result of the political crisis in the Middle East and North Africa, Net Primary Income (NPI) posted zero growth, pulling down the Gross National Income (GNI) to 3.6 percent from the 11.5 percent reported the previous year.
The strong performance of the manufacturing sector, ably supported by mining, quarrying and construction, negated the contraction of electricity, gas, and water.
The services sector likewise posted a 1.3-percent rise after declining by 0.7 percent in the previous quarter.
With the population projected to reach 95.1 million, per capita GDP grew by 2.9 percent, while per capita GNI grew by 1.7 percent.
Total exports, valued at P735.4 billion, fell behind total imports valued at P873.1 billion at current prices, resulting in a trade deficit of P137.7 billion.
The current trade deficit stood at 4.6 percent of GNI from last year’s 1.3 percent.