Philippines GDP grew 7.3 percent in 2007

The Philippine economy thrived in an environment of benign inflation, low interest rates and a strong peso to post a gross domestic product (GDP) growth of 7.3 percent in 2007, the fastest in 31 years.

"As expected, the 7.3 percent full year output expansion exceeded market expectations and is so far the strongest since the economy registered its last peak growth of 8.8 percent in 1976," acting Economic Planning Secretary Augusto Santos said in a news briefing in Makati City.

GDP, or the total value of goods and services produced in the country, grew by just 5.4 percent in 2006.

National Statistical Coordination Board (NSCB) secretary general Romulo Virola said the gross national product (GNP), or the sum of GDP and net earnings from abroad, expanded by 7.8 percent last year, faster than the 6.1 percent growth in 2006.

In the fourth quarter, Virola said GDP growth picked up to 7.4 percent from 5.5 percent a year ago, propelled by the robust performances of trade, agriculture and fishery, private services, construction and transport, communication and storage, and other sectors.

GNP went up by 6.5 percent in the fourth quarter, compared to 6.1 percent growth during the same quarter of 2006.

Seasonally adjusted GDP, marking its 27th quarter of positive growths, accelerated to 1.8 percent from 1.0 percent in the previous quarter.

Likewise, the seasonally adjusted GNP, which has also been on positive territory since the second quarter of 2003, picked up to 1.4 percent from 0.9 percent in the third quarter.

The NSCB also revised upward the third GDP quarter growth figure to 7.4 percent from the earlier estimate of 6.6 percent while the GNP growth figure in the same quarter was raised to 8.8 percent from 8.2 percent.

On the production side, the agriculture, fishery and forestry sector grew 5.1 percent in 2007 while industry posted a remarkable 6.6 percent growth, buoyed by the 25 percent expansion of the mining sector and 19.6 percent increase in construction.

Services continued to remain as the main source of overall growth, as the sector surged 8.7 percent last year, on the back of a 12.3 percent growth in banking and finance, 9.8 percent increase in trade and 8.2 percent growth in transport, communication and storage.

On the production side, the personal consumption expenditure rose 6.0 percent last year, while government spending increased 10 percent.

"Overall investment spending expanded further to 9.3 percent in real terms with business sentiment continuing to remain high as indicated by results of the business expectation surveys of the Bangko Sentral ng Pilipinas," Santos said.

Despite the rosy economic figures, former Economic Planning Secretary Cielito Habito noted that growth remains to be felt by the masses, because bulk of the economic expansion is happening in urban areas, outside the reach of the poor farmers and fishers.

Economists also warned that growth this year will not be as robust as last year, because of the feared economic recession in the United States, the Philippines ' largest trading partner.

Santos conceded that "the continued weakness of the US economy and the volatile oil prices are clouds in the horizon that pose downside risks to growth in 2008."

A simulation by the National Economic and Development Authority (NEDA) showed that a one percent decline in the gross domestic product of the United States is associated with a 1.764 percentage point reduction in the GNP growth of the Philippines.

"While the uncertainties will remain in 2008, increasing public-private sector partnerships will prove to be potent in attaining the economic goals for this year as well as in making this growth felt by all sectors of the society," Santos said.

The government targets to achieve a GDP growth range of 6.3 to 7.0 percent in 2008.