RP economy grows 3.8% in first quarter of 2002

The economy grew within expectations during the first quarter of this year, with the gross domestic product (GDP) expanding to 3.8 percent, up from the 2.9 percent posted in the January to March last year.

Socio-economic planning Secretary Dante Canlas said the economy on the whole is "healthy" and "on track" to meet growth targets for the year, forecast to hit the range between 4 percent and 4.5 percent.

The services sector accounted for nearly 60 percent of the first quarter GDP growth, Romulo Virola, an official of the National Statistical Coordination Board (NSCB), told a media briefing.

GDP refers to the aggregate value of goods and services produced by the country during a certain period.

Virola said key sectors like services, industry, and agriculture grew, but subsectors such as manufacturing and finance failed to improve.

In terms of gross national product (GNP), which includes remittances and investments from abroad, economic growth stood at 4.9 percent during the first quarter, also an improvement from the 3.4 percent in the same period last year.

Canlas said net factor income from abroad rose by an impressive 22 percent during the period, highlighting the benefits derived from the continued increase in the overseas deployment of Filipino workers.

"The Philippine economy, on the whole, is healthy and continues to gather strength," Canlas said. "The sound aggregate economic performance being observed owes a great deal to the administration’s macro-economic strategy ushered last year," he said.

Canlas said a major part of the government’s macroeconomic strategy is the budget deficit reduction program to put the state back on the track of fiscal discipline and to allow the private sector to lead the economic growth.

He insisted that the government would "continue to reject shortsighted measures, like pump priming, to address structural problems."

Canlas said the expected impact of the El Niño weather phenomenon and the increasing cost of power and water costs would not significantly dent the economy because of the rise in exports and growing personal consumption.

Weather officials have predicted that the El Niño this year would be milder compared to previous years.

The NSCB computes the national income account based on constant 1985 prices to weed out the effects of inflation. In real terms, the GDP amounted to about P242 billion, up from the P233 billion registered in the first quarter of 2001.

Canlas said the government is worried about the "possible weakening of the economic recovery in the United States" because more than 20 percent of Philippines’ gross exports are still bound for the US.

Producers and consumers were responding positively to government measures that resulted in a decline in inflation and interest rates, and a more stable peso-dollar exchange rate.

There was little reaction to the data on the markets. The peso was slightly higher at 49.95 to the dollar from the Wednesday night close of 50.07.

The stock market index was down 0.33 at 10:45 a.m., but traders said the GDP numbers were already priced in. – With AFP report