Economy grows by 6.1% in 2004

[mazdamazda]

Economy grows by 6.1% in 2004
Posted: 5:42 PM | Jan. 31, 2005

(4TH UPDATE) THE PHILIPPINE economy expanded by 6.1 percent in 2004, boosted mainly by the services sector led by telecommunications, the National Statistical Coordination Board (NSCB) said.

Economic Planning Secretary Romulo Neri said this is the strongest economic growth since 1996, when GDP rose 5.8 percent. In 2003 the economy expanded 4.7 percent.

In the fourth quarter, GDP growth came in at 5.4 percent year-on-year, slower than the third quarter's 6.3 percent, as typhoons in the last two months dampened agricultural production.

Seasonally adjusted, GDP grew 0.6 percent in the fourth quarter from the previous quarter.

The full-year growth exceeded the government's target range of 4.9-5.8 percent, but was within economists' forecasts of 6.0-6.5 percent.

GNP, which includes dollar remittances of Filipino workers, grew 6.1 percent in 2004 and 5.5 percent in the fourth quarter.

"The Philippine domestic economy sustained its growth momentum in the four quarters of [2004] as it resiliently withstood the threats posed by the continued hike in oil and consumer prices...concerns over the country's fiscal deficit and the typhoons that hit the country during the fourth quarter," said NSCB secretary-general Romulo Virola.

Services accounted for about 47 percent of total GDP in 2004 and contributed 3.37 percentage points to overall growth, he said.

Industry accounted for 33 percent and contributed 1.77 percentage points, while agriculture made up about 20 percent and contributed 0.96 percentage point.

President Gloria Macapagal-Arroyo said in a statement that she was "delighted" with the growth figures.

She thanked Congress for "putting our fiscal house in order" and the country's farmers who managed to maintain high productivity despite the floods and typhoons late last year which destroyed large areas in northern Luzon.

Arroyo said industry and services are picking up due to higher farm incomes and that overseas remittances are adding fuel to the country's "growth engine."

The young professionals manning our call centers and outsourcing firms are raking in [the] appreciation of investors," she added.

The Philippine stock market reacted favourably to the news with the composite index rising 0.25 percent to 2,019.56, its highest level in nearly five years.

"The growth rate was within expectations but the market is happy with a healthy gain for the economy despite high oil prices and rising inflation," said Lawrence de Leon of Accord Capital Equities.

The NSCB also announced it revised up its year-on-year GNP growth for the third quarter to 6.2 percent from 6.1 percent as reported earlier.

Neri said the government is maintaining its 2005 GDP growth target range of 5.3-6.3 percent on expectations of robust investments in the mining industry and continued growth in the services and manufacturing sector.

He added that the agriculture sector in the first quarter is expected to recover from its disappointing fourth quarter performance.

"Even with the solid growth in 2004, the question on most everyone's mind is: Is the growth sustainable? A number of positive factors point to an affirmative answer," Neri said.

Neri said the government's fiscal position, though still weak, is on its track to recovery.

After ending 2004 with a lower-than-ceiling budget deficit of 186.1 billion pesos, or 3.8 percent of GDP, the government is seeking to further lower the deficit this year to 180 billion pesos, or 3.6 percent of GDP, through a series of tax measures aimed at generating additional revenue.

He said the government is also committed to supporting key sectors of the economy, particularly agriculture and small and medium enterprises, with the aim of generating 10 million jobs in the next six years.

"The government is also addressing the key bottlenecks to investment in the Philippines," added Neri, citing several of the government's infrastructure projects.

NEDA's officer-in-charge for planning Scholastica Cororaton said higher consumer prices, which will arise from the proposed two percentage point increase in the value added tax rate to 12 percent, will initially dampen domestic consumption.

However, she said these higher taxes will "in the long run" contribute 1. 3-1.6 percentage points to GDP on expectations of improved fiscal health and stronger investor confidence in the economy.

Guillermo Luz, executive director of the influential Makati Business Club said that the growth rate was quite good, considering that "last year was perceived to be a bit of a difficult year.

"We had so many events," which could have hurt the economy such as a series of destructive typhoons and uncertainty following President Arroyo's victory in elections in May which the opposition had charged was due to cheating.

Luz said the growth in agriculture had been "the big surprise," of the year, adding that this would greatly benefit the 30 percent of the workforce who are dependent on that sector.

However Luz said growth was not likely to be as high in 2005, remarking that "the expectation is slightly more termpered for 2005 than for 2004.

"There is an expectation that inflation and interest rates will be higher" due to the high price of imported fuel and the continuing budget deficits of the government which will force it to borrow more money, Luz explained.

Sentiment "is still bullish but not as bullish as last year," he said. XFN-Asia, with a report from Agence France-Presse and Lira Dalangin-Fernandez, INQ7.net. First posted 10:19 AM

[chieffy]

ano naman ba ang inflation rate natin ngayon? GDP should be > inflation rate para umangat ang ating ekonomiya di ba? tama ba?

teka pahabol...dapat din yata merong corruption rate sa pinas

[CLAVEL3699]

Sino author nyan para maabangan sa kanto at mapatay.!!!

[mazdamazda]

nope... not necessary na dapat mas mataas ang growth sa inflation... though the deficit is just a really bad mark on us.

pati napansin nyo, medyo nakakabawi na ang dollar & stock market.

this was achieved despite the jacking up of world crude oil prices, corruption, scandals, etc that keeps on hounding our country.

[falken]

maganda sana if the economy grew because of long term investments, specially the export sector, not because of ofw remittances and hot money investments in the stock market. ( hot money is investments placed in our stock market by foreign investors who could pull out their money anytime.)

[ILuvDetailing]

Mmm... I agree that with the telecommunications part, mantakin mo naman ilan bang natetext at tumatawag kada araw. Yup dapat sa export sector and tourism mag grow mahirap kasi pag sa OFW lang, medyo strict na sa ibang bansa with regards to OFWs.

One more thing, I didn't feel the economic growth. Panay taas ng presyo ng gas, nag roll back pero ilan cents lang. Haay, badtrip.

[silver_corolla]

di ko ramdan ang pag-angat ang pilipinas.... marami pa ding naghihikahos at maralita.... mayayaman lang nakakaramdam nyan.

[mazdamazda]

if the philippines isn't doing that well, how come people have disposable income to spend for telco services (specifically wireless)? the net income of globe & smart would attest to that.

[silver_corolla]

you're only referring to about 25% to 35% lang ng total population ng pilipinas ang may masasabi nating may cellfones (yun e kung may pang load sila ). 65% to 75% ang tinutukoy kong mga maralita pa din at naghihikahos.

Isa pa necessity na ang magkaron ng cellfone ngayong mga panahon na 'to. Cellfone isn't nice to have, it is GOOD TO HAVE.

Ibang tao nga dyan makalimutan na mag-brief wag lang kalimutan bitbitin ang cellfone palabas ng bahay!

[silver_corolla]

wag mo idadahilan ang telco sa pag-unlad ng bayan kahit hindi naman. Just because these Telco's earns a lot doesn't mean nakakare-cover din bansa natin sa kahirapan. Hindi mo maitatangi na necessity na ngayon ang mabilis at affordable na communication because of these telco services. That is why successful ang ganitong business dito sa Pilipinas, pero hindi ibig sabihin maunlad na bansa natin.

Ang mali e yung mga taong kahit wala ng makain basta magkaron lang ng cellfone okay na sila, "IN" na sila. Dyan nagsisimula ang tuluyang pag-lubog ni Juan Dela Cruz..... ng Pilipinas.