Official data released yesterday by the National Statistical Coordination Board (NSCB) showed the gross domestic product (GDP) growth of 6.4 percent even outpaced the broader gross national product (GNP) which expanded by 6.2 percent during the same three-month period.
GDP measures the value of production by the domestic economy in a given period. GNP, meanwhile, adds up the contribution from abroad, mainly from overseas workers’ remittances.
"The first quarter surprised us pleasantly," Socio-Economic Planning Secretary Romulo L. Neri told a press briefing. "At the moment, we are just hoping to hit our target given the oil price increases that may put a little more pressure on growth in the second quarter."
Neri earlier projected GDP growth in the first quarter at over five percent, while other economic analysts predicted the growth at between 4.3 percent to 5.5 percent.
The GDP figure, the highest since the 7.2 percent expansion recorded in the third quarter of 2000, topped the 4.8 percent growth in the same period a year earlier.
In Malacanang, President Arroyo has lauded the economic performance as "the silver lining in the midst of the contentiousness in the air" following the hotly-contested presidential elections last May 10.
Neri said the main driver for the "surprising" growth figure was the combined agriculture, fishery and forestry sector, which registered a robust 7.7 percent improvement, from only 3.3 percent a year ago. The sector accounts for about a fifth of GDP.
The other economic sectors also posted imroved numbers during the period with the services sector – powered by telecommunications – registering a 6.4 percent growth from 5.5 in 2003 and industry – led by the manufacturing sector – growing by 5.5 percent.
"Domestic demand, led by consumer spending, has held up well. Personal consumer spending grew 5.9 percent, helped by a combination of the strong growth in agriculture, election-related spending, and overseas remittances," Neri said.
But Neri, who is also the director-general of the National Economic and Development Authority (NEDA), added the increase in the price of oil presents a downside risk in the coming quarters.
Government estimates that for every $10 per barrel increase in the price of crude oil would result in a 0.5-percent contraction in GDP.
He likewise admitted that anticipated increase in the interest rates by the US Federal Reserve, which would also affect domestic rates, will also reflect in the full year GDP figure. Government remains firm in its full-year GDP forecast of between 4.9 percent to 5.8 percent.
But for former Socioeconomic Planning Secretary Cielito Habito, who is presently director of the Ateneo Center for Economic Research and Development, the first quarter GDP numbers were consistent with expectations.
"Due to the election campaign, GDP grew faster than GNP reflecting internal demand. We project a 5.8 percent growth rate this year," Habito said.
"The reason why GDP is higher now than GNP is because of the relatively low net factor income from abroad," Neri said. "This, however, tells us how productive we are internally."
Compared with other Asian economies, however, the Philippines still trails behind most of its neighbors in terms of growth. In the first quarter, China reported a 9.7 percent growth, Malaysia at 7.6 percent, Singapore at 7.5 percent , and Taiwan at 6.3 percent.
Only South Korea (5.3 percent) and Indonesia (4.5 percent) registered lower GDP growth than the Philippines.