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Philippine Economy

In: Business and Management

Submitted By mbagustin1
Words 489
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The Philippine economy managed to grow in the first semester of 2014 despite the haunting effect of Typhoon Yolanda that hit the country during the fourth quarter of 2013 and the lingering weakness of the global economy. For the first semester of 2014, Gross Domestic Product (GDP) grew by 6.0%, relatively slower than 7.8% reported in the first semester of 2013 and below the 6.5% -7.5% National Government’s target for the year. Meanwhile, Gross National Income (GNI) accelerated by 7.2% from 6.8% in the first semester of 2013. The Philippine is usually described as domestic-demand driven economy, but because of logistical challenges this year, the second quarter growth of 2014 was driven by net exports.

Total exports grew by 10.3 % in the second quarter of 2014, a rebound from the 7.7% contraction in the same period last year. The growth was fuelled by exports of goods and exports of services. Total exports of goods increased by 10.0% in the second quarter of 2014 from a decline of 8.8% in the same period last year. Electronics manufacturers, the country’s largest exporters, improved their export growth forecast for the year to 8.0% from the previous 5.0% with demand expected to improve on the back of the economic recovery in the industry’s major export markets like the United States and China, and the lifting of Manila’s extended truck ban.

Household Final Consumption Expenditures continued to expand in the second quarter of 2014 by 5.3% relative to the 5.1% reported in the same period last year. This reflected upbeat consumer sentiment despite the higher inflation recorded in the period. Possibly the impact of a higher inflation was partly moderated by the weakening of the Philippine Peso and the value of OFW remittances. Household expenditure items that boosted the growth were food and non-alcoholic beverages, alcoholic beverages and tobacco, clothing and footwear, furnishing, transport, health and restaurant and hotels while miscellaneous goods and services, utilities, recreation and education posted decelerated growth.

Investment in fixed capital formation plunged to 4.0% in the second quarter of 2014 from 13.6% in the same period last year. Total investments in construction posted a growth of 5.1% in the second quarter of 2014, a sharp decline from the 16.5% growth posted in the second quarter of 2013. The decline was due to the lower public construction spending for the period in infrastructure and other capital outlays as major government agencies posted lower than programmed disbursements.

Government Final Consumption Expenditure decelerated to 0.02% in the second quarter of 2012 from 12.1% in the same period last year. The sharp decline was due to the slowdown of major government expenditures for salaries and wages as well as Maintenance and Other Operating Expenditures (MOOE) for the implementation of programs and projects amid concerns on the misuse of government funds.

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