February 1, 2007

 

Philippines misses target economic growth due to weak farm output
 
 

The Philippines missed its economic growth target in 2006 on the spate of typhoons in the last quarter that pulled down farm output, which comprises a fifth of the domestic production, reports the Manila Times daily.

 

According to Romulo A. Virola, secretary-general of the National Statistical Coordination Board (NSCB), the country's gross domestic product (GDP), which is the sum of goods and services produced locally, grew 5.4 percent, a percentage point below the target the government set for the year.

 

The interagency Development and Budget Coordinating Committee earlier said the domestic economy would grow between 5.5 percent and 6.1 percent in 2006.

 

In 2005 the economy grew 5 percent.

 

In the fourth quarter alone, the GDP rose 4.8 percent from the same period a year earlier.

 

On a seasonally adjusted basis, the economy grew 0.8 percent from the third quarter.

 

The tropical cyclones that hit the country in the fourth quarter have affected agriculture output which cut off 0.4 percentage points to the fourth-quarter GDP growth based on government calculations, said Socioeconomic Planning Secretary Romulo L. Neri.

 

Virola said that the GDP growth in the fourth quarter was driven by the services sector, which strengthened its growth to 7 percent from 6.4 percent previously. It compensated the slowdown in industry, which grew by 3.3 percent, and the deceleration in the farm sector at 3.7 percent.

 

Services, with a share of 48 percent of total GDP, contributed the most to growth at 3.3 percentage points. Leading the sector's growth were trade, transportation, communication and storage and private services.

 

Agriculture, fishery and forestry, which accounted for 20.4 percent slowed to 1.9 percent from 3.7 percent last year, contributing 0.4 percentage points to total expansion.

 

Neri said the growth outlook for this year will depend primarily on the downside risks on both the external and domestic fronts.

 

On the external front, Neri said though the US market is showing signs of slowing down, the current upturn in Europe and Japan are all positive factors, which would help strengthen Philippine exports.

 

Neri also said that the impact of a downturn in global electronics is unlikely to affect Philippine exports, as semiconductor sales to computer and auto companies can make up for weaker demand from cell phone manufacturers.

 

The director concluded that few key factors such as macroeconomic reforms and the government's commitment to sustain them will have the expected 2007 budget to generate some growth momentum and possibly investment interest in the economy.