Dissecting Data: Third quarter GDP revised slightly upward

Warren de Guzman and Edson Guido, ABS-CBN News

Posted at Jan 27 2021 06:52 PM

Makati Business district, April 23, 2018. Jonathan Cellona, ABS-CBN News

MANILA - The Philippine Statistics Authority (PSA) delivered some good news Wednesday, revising the third quarter GDP performance of the Philippines slightly upward to -11.4 percent, from the previously reported -11.5 percent.

The PSA however also delivered some telling information on the Philippines’ economic performance in the fourth quarter of 2020. 

The Philippine farm sector, which managed to grow its output in the second and third quarters of 2020 while the entire economy was contracting by double digits, saw a contraction of 3.8 percent in the fourth quarter of last year. 

That is more than triple the 1.2 percent contraction in agriculture output seen in the first quarter of 2020, when the Taal Volcano erupted. 

Philippine Statistics Authority

Hog production fell 13.8 percent, faster than the 12.9 percent decline in overall livestock output. This can be attributed to the African Swine Fever. A new strain of the disease is expected to create even more problems for hog farmers moving forward.

Crop production, which accounted for nearly 60 percent of total agriculture output, contracted by 0.4 percent, as several severe storms battered key farming provinces toward the end of 2020.

The lower production by the local farming sectors has put upward pressure on food prices, and consumers are feeling the pain.

However Laban Konsyumer, a consumer rights group led by former Trade Under Secretary Vic Dimagiba, said rising pork prices may also be a result of cartel-like activities by farmers. 

Dimagiba said the government should not hesitate to file cartel charges if hog growers and traders were found engaging in anti-competitive practice and restricting the supply of pork products, resulting in higher prices at retail markets. 

"We ask for the government and the different agencies to follow through on this investigation... we have also asked if they are also looking at whether the high prices were a result of inefficiencies in the supply chain,” Dimagiba said.

December Trade data meanwhile show imports and exports again declined in the last month of 2020. 

Philippine Statistics Authority

Exports contracted by 0.2 percent for the month, after managing a growth of 4 percent in November. Philippine exports contracted in eight out of the 12 months of 2020, bringing the full year cumulative export earnings for the year to $63.77B. That is an over 10 percent decline from 2019 levels.

Philippine Statistics Authority

Imports contracted 9.1 percent, half of the decline suffered in November. Philippine imports have contracted for 20 straight months. It last grew in April 2019, at a rate of 2.9 percent. Philippine imports for the year amounted to $85.61B. That is a decline of over 23 percent year on year. 

Philippine Statistics Authority

The contraction in imports outpaced the contraction in exports, which means the Philippines spent less on importation. This has a positive impact on the Philippines’ balance of payments and gross international reserves. The GIR is in fact at an all-time high of over $100B. 

One of the few bright spots in trade was Philippine exports of Personal Protective Equipment. Philippine exports of PPE and medical supplies abroad hit $3.32M, up 709 percent year on year. 

The value of the items was up 1,028.7 percent from 2019 levels. These products include surgical face masks and face shields. The month-on-month performance of these exports actually declined. The export value decreased by about 27 percent. That however is much better compared to the 47 percent decline suffered in November.

Philippine Statistics Authority

Japan based financial services company Nomura said the goods trade deficit widened substantially to a much larger-than-expected $2.2 billion in December. 

Analysts expected the deficit to be $1.7billion, while Nomura forecast it to be $1.6 billlion, from $1.7B in November, which marks the largest deficit since the start of the pandemic. 

"The widening was driven by a combination of export growth weakening to -0.2 percent from 4 percent, while the contraction in imports moderated to 9.1 percent from 18.3 percent. For full-year 2020, the trade deficit nearly halved to $21.8 billion from $40.7 billion in 2019, reflecting the impact of the COVID-19 pandemic, particularly on import demand as a result of the deep economic recession,” Nomura said. 

Nomura saw some silver linings, noting “electronics export growth improved slightly to 4.9 percent from 4.6 percent, suggesting continued benefits from the global tech upcycle but to a lesser extent than other regional exports.”

The trade data was released by the PSA as the Department of Trade launched its first ever Virtual National Trade Fair, with Trade Secretary Ramon Lopez delivering the opening remarks. 

Lopez did not discuss the latest import and export numbers, focusing instead on the DTI’s efforts to help micro, small and medium enterprises compete in a highly digitalized economy. 

The Trade chief said he remains optimistic about 2021. 

"Having survived the worst of times last year, it is time to get ready for the best of times this year,” Lopez said. 

The Philippine government expects GDP to grow by at least 6.5 percent this year. It expects full year GDP growth for 2020 to hit between -8.5 and -9.5 percent.

Fourth quarter GDP numbers will be released Thursday, Jan. 28, at 10 a.m. Manila time. 

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