Despite the El Niño and the diminished government spending during the second semester, the domestic economy sizzled to its highest annual GDP growth in the post Marcos era of 7.3% in 2010 from 1.1% in 2009, according to the National Statistical Coordination Board (NSCB). The global economic recovery which resulted in record growth rates of foreign trade and election related stimuli that combined for a record first semester growth, followed by the peaceful conduct of the national elections and the renewed trust in government contributed to an economic performance in 2010 that well surpassed the government’s target of 5% to 6%. Industry and services sectors expanded strongly in the last quarter of 2010 while Agriculture recovered after four consecutive quarters of decline due to El Niño, pushing GDP to grow by 7.1% in Q4.
With the prevailing sanguine outlook of both business and consumers, the economic prospects for 2011 are indeed exciting.
On the demand side, increased consumer spending for the whole year buttressed by increased investments in Fixed Capital Formation posting its highest growth rate since 2000, particularly in Durable Equipment and sustained by the double digit growth in international trade contributed to the record GDP growth in 2010.
Likewise, annual GNP accelerated by 7.2% from 4% last year in spite of the weakened growth in NFIA from 28% in 2009 to 6%. For the fourth quarter, the continuing, though much decelerated demand for the services of our OFW’s caused NFIA to grow by 3.8% from 19.5% last year, pushing GNP growth to 6.7% from last year’s 4.1%.
The seasonally adjusted estimates show a surging Philippine economy as GDP jumped by 3% from a decline of 0.8% in the previous quarter while the seasonally adjusted GNP accelerated to 2.9% from 0.2% growth in the third quarter.
With the record pace of economic growth in 2010, per capita GDP rose by 5.3% from a decline of 0.9% in 2009. Per capita GNP and per capita PCE likewise posted huge growths of 5.1% and 3.3% from 2% and 2.1%, respectively.
Growth of Major Economic Sectors
In 2010, Industry once again took the driver seat in boosting the economy with its huge 12.1% growth from a decline of 0.9% the previous year. Services provided more than able support as it grew by 7.1% from 2.8%. However, Agriculture, hounded by El Niño, posted a negative 0.5% from zero growth in 2009.
For the fourth quarter of 2010, Industry accelerated to 8.3% from 3.8%, almost sustaining its third quarter growth. Services likewise accelerated, growing by 6.9% from 3.1%. And AFF, after being battered for four consecutive quarters by abnormal weather conditions, rebounded by 5.4% from a decline of 2.9%.
Of the 7.3% growth in GDP for the whole year of 2010, 3.9 percentage points came from Industry and 3.5 percentage points came from Services while AFF pulled down the growth with negative 0.1 percentage point.
In the fourth quarter, the 7.1% growth in GDP came from Services, with 3.3 percentage points; Industry, 2.7 percentage points and AFF, 1 percentage point.
The seasonally adjusted AFF sector grew by 4.2% from a 1% growth in the previous quarter largely due to the growth in palay and corn. On the other hand, Industry rebounded to a 6.7% growth from a 5.9% decline in the previous quarter due to the expansion of Manufacturing and Mining & Quarrying. Services sector, however, decelerated to 0.3% from 2% caused partly by two consecutive quarters of decline in Government Services.
On the demand side, all expenditure items registered accelerated growths in 2010 with Total Exports, Total Imports and Capital Formation rebounding to 25.6%, 20.7% and 17% from a decline of 13.4%, 1.9% and 5.7%, respectively. Likewise, consumer spending accelerated to 5.3% from 4.1%. However, government spending decelerated to 2.7% from 10.9%.
For the fourth quarter, all expenditure items likewise registered positive growths, except Government Consumption Expenditure which declined by 7.6%. Personal Consumption Expenditure accelerated to 7%, the highest since the 8.4% growth recorded in the third quarter of 1988, from 5% in the same period last year. Investments in Fixed Capital Formation grew robustly with 22.8%, the highest since the 27.3% of the fourth quarter 2000, from last year’s growth of 5.8% as a result of accelerated investments in Durable Equipment. Total Exports expanded by 21.1% from a decline of 6.7% as both Merchandise Exports and Non Merchandise Exports posted robust growths. And, Total imports accelerated to 21.8% from 6.8% in the previous year as both Merchandise Imports and Non Merchandise imports recorded double-digit growths.