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HIGHLIGHTS
Second Quarter 2014
PHILIPPINE ECONOMY POSTS 6.4 GDP GROWTH IN 2nd QUARTER;
6.0 PERCENT IN FIRST HALF OF 2014
GDP grew year-on-year by 6.4 percent in the second quarter of 2014 from 7.9 percent in the same period last year but higher than the growth rate of 5.6 percent in the first quarter of 2014.
The second quarter growth was driven by the Industry sector, which grew by 7.8 percent, followed by the Services sector which grew by 6.0 percent.
It is noted that the growth in Industry sector is lower than the previous year’s growth rates of 10.5 percent in Q2 but higher than the 5.3 percent in Q1 this year. Manufacturing, which grew by10.8 percent, was the highest contributor in the industry sector.
On the other hand, growth in the Services sector is lower than that in Q2 2013 at 7.8 percent and Q1 2014 at 6.8 percent. Meanwhile, Agriculture rebounded to 3.6 percent from a decline of 0.2 percent in Q2 2013.
Gross National Income (GNI) accelerated by 7.3 percent from 6.4 percent in the same period last year with the continued inflow of remittances that boosted the rebound of Net Primary Income from the Rest of the World by 12.7 percent from a decline of 1.2 percent last year.
For the first semester of 2014, GDP grew by 6.0 percent from 7.8 percent in the first semester of 2013 while GNI accelerated by 7.2 percent from 6.8 percent.
On a seasonally adjusted basis, GDP accelerated by 1.9 percent in the second quarter of 2014 from 1.4 percent the previous quarter while GNI maintained its growth at 1.5 percent. All major sectors posted positive growth in seasonally adjusted terms for the second quarter of 2014. In particular, the Industry sector posted a growth of 2.8 percent in the second quarter of 2014 from 1.0 percent the previous quarter. Similarly, Agriculture accelerated by 1.3 percent from 0.4 percent in the previous quarter. However, Services slowed down to 1.4 percent growth in the second quarter of 2014 from 1.9 percent in the previous quarter.
With the country’s projected population reaching 99.7 million in the second quarter of 2014, per capita GDP grew by 4.6 percent from 6.0 percent of the same quarter of 2013. Per capita GNI grew by 5.5 percent and per capita Household Final Consumption Expenditure (HFCE) grew by 3.6 percent, from 4.6 percent and 3.3 percent in the previous year, respectively.
PRODUCTION SIDE
Agriculture, Hunting, Forestry and Fishing (AHFF)
The AHFF sector, which accounted for 9.2 percent of the total GDP, rallied from previous year’s slump of 0.2 percent as it posted growth of 3.6 percent in Q2 2014.
Agriculture rebounds considerably
Agriculture subsector, which contributed 81.4 percent to the entire AHFF sector, registered a growth of 4.3 percent from negative 1.2 percent a year ago. The leading growth drivers in agriculture were mango, corn, and cassava.
Mango reported a significant growth of 12.9 percent, which can be attributed to favorable weather conditions, while corn grew by 11.8 percent as a result of area expansion. Meanwhile, a 9.1 percent growth was recorded for cassava during the period.
Palay, which contributed 19.2 percent to the GVA of AHFF, posted a growth of 6.4 percent.
Livestock and poultry, which ranked second and third to palay in terms of share to total GVA, exhibited corresponding minimal growths of 0.7 percent and 0.1 percent.
Other crops grew by 8.1 percent, the main contributors of which were garlic, onion, and tobacco.
Forestry expands
The forestry sector grew by 32.5 percent, accelerating from the 30.7 percent growth in the previous year.
Fishing declines
Fishing declined by 0.7 percent from a 3.3 percent growth a year ago. Among its subsectors, tiger prawn, seaweed, and milkfish exhibited declines of 8.0 percent, 4.4 percent, and 2.2 percent, respectively.
Industry
Manufacturing drives Industry sector
Industry posted a 7.8 percent growth in the second quarter of 2014 albeit slower than the 10.5 percent growth recorded a year ago. Among its subsectors, Manufacturing posted the fastest growth, 10.8 percent from 10.3 percent in 2013. The Mining and Quarrying subsector likewise sped up but Construction and Electricity, Gas and Water Supply subsectors both posted lower growth compared to the same quarter a year ago.
Mining and Quarrying accelerates
Mining and Quarrying accelerated to 1.9 percent from 0.3 percent in the previous year. Nickel Mining, the biggest contributor to the growth of the sector, grew by 7.2 percent from 2.5 percent in 2013. This was followed by Other Non-Metallic Mining, which grew by 6.2 percent from 3.7 percent and Chromium Mining, which grew by 56.9 percent from 18.4 percent.
The growth of the sector was weighed down by the performance of the following sectors: Gold Mining, negative 16.4 percent from 7.1 percent; Other Metallic Mining, negative 74.5 from negative 2.0 percent; Copper Mining, negative 17.0 percent from 40.3 percent; Crude Oil, Natural Gas and Condensate, which declined by 0.5 percent from a decline of 7.3 percent; and Stone Quarrying, negative 0.5 percent from 13.9 percent.
Food Manufactures leads growth of Manufacturing
Among the industries under Manufacturing, food manufactures, which posted faster growth of 10.7 percent from 6.4 percent, was the biggest contributor to the growth of the sector. Other contributors to the growth were: Radio, television and communication equipment and apparatus, which slowed down to 9.4 percent from 15.1 percent; Furniture and fixtures grew by 30.6 percent from 45.3 percent growth; Fabricated metal products, which rebounded to 48.6 percent from a 3.4 percent contraction; and Petroleum and other fuel products, which rebounded to 24.5 percent from negative 2.1 percent.
On the other hand, the following pulled down the growth of the sector: Non-metallic mineral products, which declined by 6.8 percent from a growth of 14.9 percent; Wood, bamboo, cane and rattan articles, down by 5.9 percent from negative 10.3 percent; Wearing apparel, negative 1.5 percent from negative 11.5 percent; Paper and paper products, negative 1.6 percent from negative 9.1 percent; and Tobacco manufactures, negative 0.3 percent from negative 6.9 percent.
Construction decelerates
Construction decelerated to 1.4 percent from a double digit growth of 16.6 percent registered in 2013 due to the contracted growth of the Public construction despite the robust performance seen in the Private construction.
Electricity, Gas and Water Supply growth slows down
The Electricity, Gas and Water Supply (EGWS) decelerated to 2.8 percent in the second quarter of 2014 from a 7.0 percent expansion last year.
Electricity, which accounts for 86.0 percent of EGWS, slowed down to 2.6 percent from a growth of 7.3 percent last year. Water Supply also posted deceleration, 2.6 percent from 5.9 percent in 2013.
Steam, on the other hand, rose by 8.9 percent compared to 3.2 percent in 2013.
Services
Services continues to drive the economy
Services, with a share of 57.6 percent to total GDP, contributed the most to GDP growth with 3.5 percentage points. Major contributors to the sector’s growth were Trade; and Real Estate, Renting, and Other Business Activities.
Transport, Storage and Communication slows down
Transport, Storage and Communication grew by 6.3 percent in the second quarter of 2014, a deceleration from the 6.6 percent growth it posted a year ago. Contributing to the decelerated growth of the sector was Communication, which slowed down to 2.1 percent from 7.6 percent in the same quarter last year.
Other subsectors that contributed to the expansion of the sector posted accelerated growth: Land Transportation with a growth of 8.5 percent from last year’s growth of 7.3 percent; Storage & Services Incidental to Transport accelerated to 21.5 percent from 10.5 percent in the same period last year; and Air Transport with a growth of 30.4 percent, a recovery from previous year’s growth of negative 5.3 percent.
Meanwhile, Water Transport turned around to 2.4 percent growth from negative 7.3 percent last year.
Trade speeds up
Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods accelerated to 6.6 percent in the second quarter of 2014 from 6.3 percent posted in 2013. Retail trade, which grew by 6.1 percent contributed significantly to the growth of the sector, although the growth was slower that the 6.5 percent in the previous year. Wholesale Trade accelerated to 9.0 percent, which is almost double from its 4.7 percent growth in 2013.
Maintenance and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods slowed down to 7.3 percent from 8.5 percent in the same period last year.
Financial Intermediation eases
Financial Intermediation Services decelerated to 5.9 percent in the second quarter of 2014 compared to the 10.3 percent growth posted in 2013. Among its subsectors, only the Banking subsector accelerated, registering a 7.5 percent growth from its 6.4 percent growth in 2013. All other subsectors recorded decelerated growths: Non-banking financial institutions slowed down from 9.8 percent to 3.7 percent; Insurance, 7.7 percent from 21.1 percent; and Activities Auxiliary to Financial Intermediation, 4.9 percent from 14.4 percent.
Real Estate, Renting and Business Activities decelerates
Real Estate, Renting and Business Activities expanded by 8.9 percent in the second quarter of 2014, albeit slower than its 9.5 percent growth last year. The slowdown was due to the decelerating growth of Real estate and Ownership of dwellings, which grew by 9.3 percent from 19.0 percent and by 0.7 percent from 2.4 percent, respectively.
On the other hand, Renting and other business activities accelerated to 15.8 percent from 11.3 percent growth posted a year ago.
Public Administration and Defense slows down
Public Administration and Defense; Compulsory Social Security Schemes decelerated to 1.2 percent from 5.9 percent in 2013. This was due to the slowdown in the filling up of vacant positions for the implementation of government collective services, such as public administration and defense.
EXPENDITURE SIDE
Household spending expands
Household spending continued to expand in the second quarter of 2014 by 5.3 percent from 5.1 percent last year.
Food and Non-alcoholic beverages expenditures, which accounted for 41.2 percent of the total household spending, grew by 4.0 percent but showed a slowdown from its 5.0 percent growth registered in 2013.
Among household expenditure items that boosted the growth were: Alcohol, beverages and tobacco, 11.4 percent from negative 5.7 percent; Clothing and footwear, 6.2 percent from negative 5.0 percent; and Furnishing, household equipment and routine household maintenance, 4.1 percent from negative 5.2 percent. Expansion at double-digit growth of three major household items were registered for Transport, 11.9 percent from 6.6 percent; Health, 10.6 percent from 6.1 percent; and Restaurants and hotels, 10.4 percent from 6.8 percent.
On the other hand, the following expenditure items posted decelerated growth: Miscellaneous goods and services, 5.8 percent from 7.9 percent; Housing, water, electricity, gas and other fuels, 5.5 percent from 8.2 percent; Recreation and culture, 3.7 percent from 8.9 percent; and Education, 2.8 percent from 5.1 percent.
Government Final Consumption Expenditure (GFCE) slows down
Government Consumption Expenditures decelerated to 0.02 percent from 12.1 percent in 2013 due to the slowdown of major government expenditures for salaries and wages as well as maintenance and other operating expenses (MOOE) for the implementation of programs and projects under sectoral departments.
Investment in Fixed Capital Formation plunges
Investments in Fixed Capital Formation shrank to 4.0 percent from 13.6 percent in the same period last year.
Investments in construction decelerates
Total investments in Construction grew by 5.1 percent, a deceleration from the 16.5 percent growth recorded in 2013. Private construction posted a sustained growth of 12.7 percent from 12.8 percent. However, Public construction contracted to 12.9 percent from 26.5 percent in the previous year.
Investments in Durable Equipment slows down
The growth of the Investments in Durable Equipment slowed down by 2.3 percent from 13.2 percent a year ago. Increased investments were registered in ten out of the 20 types of equipment.
Increases in investments were noted in the following: Tractor and Other Steam Machineries, 137.2 percent from 48.3 percent; Agricultural Machineries, 105.6 percent from 71.0 percent; Metal Working Machineries, rebounded by 46.8 percent from a decline of 2.8 percent; Water Transport, 40.5 percent from 28.4 percent; and Pulp and Paper Machineries, 37.6 percent from negative 18.8 percent.
Meanwhile, declines were noted in the following subsectors: Sugarmill machineries, 89.4 percent from 122.1 percent; Mining and construction machineries, 32.4 percent from 29.9 percent; Railway transport, 25.6 percent from a higher negative of 64.5 percent; Other Special Industrial Machineries, 11.0 percent from 18.0 percent; and Air Transport, 9.6 percent from 82.3 percent.
Investments in Breeding Stocks and Orchard Development declines
Capital formation for combined Breeding Stocks and Orchard Development for the second quarter of 2014 declined by 2.0 percent from negative 1.0 percent. Expenditures for said subsectors contracted during the period.
Inventories diminishes
Inventories recorded a total of Php 51.3 billion withdrawals in the second quarter of 2014 as compared to the Php 30.5 billion withdrawals in 2013. Establishments and agriculture posted withdrawals in their inventories.
Total Exports rebounds
Total Exports rebounded to 10.3 percent from a decline of 7.7 percent last year with the double digit growth posted by both Exports of Goods and Exports of Services.
Exports of Goods accelerates
The country’s total exports of goods increased by 10.0 percent in the current quarter of 2014 from a decline of 8.8 percent in 2013.
The increase in the total exports of goods was fueled by the following commodities: Electronic data processing, 76.7 percent from negative 12.6; Articles of apparel and clothing accessories, 23.4 percent from negative 21.9 percent; Bananas (including plantains, fresh or dried), 49.2 percent from 63.9 percent; and Ignition Wiring Sets, 22.1 from negative 2.9 percent.
The following commodities pulled down the total exports: Components/Devices (semiconductors), negative 2.7 percent from negative 3.4 percent; Metal components, negative 31.7 percent from 11.2 percent; Tuna, negative 42.8 percent from 154.9 percent; Petroleum products, negative 67.8 percent from 201.4 percent; and Automotive electronics, negative 43.3 percent from 1582.5 percent.
Export of Services recovers
Exports of Services rebounded to 11.7 percent in the second quarter of 2014 from negative 3.2 percent in the same period last year. Contributing to the expansion of the total exports of services were: Miscellaneous services, which rebounded to 11.5 percent from negative 0.7 percent; Travel, which grew by 16.6 percent from negative 13.8 percent; Government Services, 15.3 percent from negative 21.3 percent and Insurance Services, 18.5 percent from 6.7 percent.
On the other hand, Transportation Services grew, albeit at a slower pace, by 0.4 percent from negative 2.1 percent.
Total Imports rebounds
Total Imports grew by 1.4 percent from a decline of 4.6 percent in the previous year largely due to the robust performance of Imports of Service.
Imports of Goods decreases
The total Imports of Goods for the first quarter of 2014 declined by 3.9 percent from negative 6.1 percent the previous year.
The major contributors to the total imports of goods were: Others, 19.8 percent from negative 14.9 percent; Transport equipment, 9.9 percent from 13.9 percent; Artificial resins, 32.8 percent from 3.4 percent; Base metals, 21.5 percent from 18.1 percent; and Electrical machinery, 22.1 percent from negative 2.6 percent.
On the other hand, Semiconductors and Electronic data processing contributed negatively to the first quarter’s growth of imports of goods with 75.5 percent and 23.0 percent declines from negative 32.1 percent and negative 19.7 percent, respectively. This was followed by Mineral Fuels, negative 4.9 percent from 23.4 percent; Metalliferous ores and metal scrap, negative 66.7 percent from 3834.5 percent; and Chemical products, negative 16.8 percent from 13.3 percent.
Imports of Services accelerates
Imports of Services accelerated to 26.2 percent in the second quarter of 2014 from 3.1 percent in the same period last year. The contributors to the growth of the sector were Travel Services, which grew by 39.9 percent from 5.9 percent; Miscellaneous services, which grew by 33.7 percent from 17.2 percent; and Government Services, 17.6 percent from negative 24.4 percent.
Meanwhile, Insurance Services, declined by 9.4 percent from negative 2.5 percent; and Transportation Services, negative 8.5 percent from negative 11.8 percent.
Trade Balance continues to post deficit
In the second quarter of 2014, Total Exports valued at Php 894.7 billion fell behind Total Imports valued at Php 929.4 billion at current prices, resulting to a trade deficit of Php 34.6 billion.
The current trade deficit stood at 0.9 percent of GNI from last year’s negative 2.7 percent.
Trade Index remains unfavorable
Trade Index in the second quarter of 2014 stood at 84.0 percent compared to 85.1 percent in 2013. Trading loss for the quarter amounted to Php 145.2 billion at constant prices.
GNI Implicit Price Index (IPIN) stood at 172.8 percent from 167.6 percent in the previous year or a 3.1 percent inflation.