DOF Economic Bulletin on GDP, Second Quarter of 2018
The economy took a breather in the second quarter as real GDP growth decelerated to 6.0% from 6.6% in the first quarter.
The main reasons are:
1. Slowdown in manufacturing to 5.6% from 7.6% in the first quarter; and 2. Slowdown in agriculture to 0.2% from 1.1% in the first quarter.
However, there is silver lining amid the slowdown.
First, capital formation soared to 20.7% on the back of strong 28.6% acceleration in durable equipment.
Second, exports of goods and services recovered to a double-digit growth of 13.0% from 6.5% in the first quarter amid a rebound in electronics components.
Consumer electronics and office equipment also showed triple digit expansions.
These imply that the economy will be able to recover lost ground in the next quarters as the equipment and factories set up in the second quarter will start operations.
Also, the rise in the goods trade deficit will be sustainably financed by a growing services trade surplus.
Table 1. GDP Growth by Source (%)
2017Q2 2018Q1 2018Q
2 2017S1 2017S2 2018S1
Expenditure
Consumption 6.0 5.7 5.6 5.9 5.8 5.7 Government
Spending 7.6 13.6 11.9 4.3 10.2 12.6 Investment 7.6 12.4 20.7 9.5 9.2 16.4 Construction 4.7 10.0 12.9 7.5 4.4 11.6 Public 12.2 24.9 21.0 9.3 17.4 22.1 Private 0.6 6.7 7.9 6.8 1.2 7.3 Exports 21.4 6.5 13.0 19.5 19.6 9.8 Imports 18.6 9.6 19.7 18.6 17.7 14.6
GDP 6.6
6.6
6.0
6.6
6.8
6.3
Industry
AHFF 6.3 1.1 0.2 5.6 2.5 0.7 Agriculture &
Forestry 8.1 1.9 0.2 6.8 3.3 1.1
Fishery (2.7
) (3.6
) 0.3 (0.8) (1.0) (1.7) Industry 7.1 7.7 6.3 6.9 7.5 7.0
Mining &
Quarrying
19.2 6.9 (10.9 )
1.8 6.7 (4.2) Manufacturing 8.0 7.6 5.6 7.8 8.9 6.6 Construction 4.3 8.8 13.5 6.5 4.2 11.5 Utilities 3.0 6.4 3.8 2.4 4.4 5.0
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Services 6.4 6.8 6.6 6.5 7.1 6.7
GDP 6.6
6.6
6.0
6.6
6.8
6.3
Source: PSA
DOF View
· Government is keeping its eye on the bigger picture, that is, that growth, if it is to remain sustainably high, should be driven by investment. Public construction has accelerated to 22.1% in 2018S1, more than double the 2017S1 growth of 9.3%. Private construction is also picking up.
· Government should keep its focus on enhancing the country's long-term prospects by increasing the economy's productive capacity (through infrastructure and social services) while maintaining macroeconomic stability.
While CPI inflation has remained elevated, the broader GDP deflator-based inflation shows a 3.1% price increase for all consumer and investment goods.
Table 2. Various Measures of Inflation
2017Q2 2018Q1 2018Q2 2017S1 2017S2 2018S1
Deflator
Consumption 2.9 3.6 4.5 3.0 2.5 4.1 GDP 2.4 2.9 3.4 2.5 2.1 3.1
CPI
Food 3.1 5.0 5.9 3.0 3.1 5.5 All Items 2.8 3.9 4.8 2.9 2.8 4.3 Core Inflation 2.5 3.0 3.8 2.6 2.4 3.4
Source: PSA
Table 3. Selected Fiscal Indicators
2017Q2 2018Q1 2018Q2 2017S1 2017S2 2018S1 Revenue 16.3 15.8 18.3 15.6 15.6 17.1
Tax 14.9 14.3 16.1 14.2 14.3 15.2 Expenditure 18.1 19.7 19.2 17.7 18.0 19.5 Primary Balance (0.5) (1.4) 0.6 (0.0) (0.4) (0.3) Deficit (1.8) (3.9) (0.9) (2.1) (2.4) (2.3) Gross NG Debt 42.5 42.6 42.5 42.5 42.1 42.5 Sources of Basic Data: DOF, PSA
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