BD projects GNP growth but at slower rate of 5.1%

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Part of Business Day Special Report

Title: BD projects GNP growth but at slower rate of 5.1%
Language: English
Year: 1975
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Fulltext: hursday, September 11, 1975 I • - * 4 SPECIAL REPORT * NET DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN (At 1967 prices in million pesos) Calendar Year 1975* at slower 1% Worldwide economic difficulties will force a slump in the growth rate of the Philippine’s Gross National Product (sum total of goods and services) in 1975. I • •It lower than the increment of 5.8 per cent posted by the economy in 1974 over the equivalent period in 1973. may reach P42,742 million at 1967 prices. This is higher by 5.1 per cent over the GNP output of P40.655 million in 1974. H t * * SERVICES (6.0%) COMMERCE (3.5%) CONSTRUCTION (14.5%) MANUFACTURING (5.7%) NET DOMESTIC PRODUCT P33.901 P10,246 ^AGRICULTURE I FISHERY & / FORESTRY (6.4%) I TRANSPORTATION, COMMUNICATION STORAGE & UTILITIES (5.4%) P1.21! Utilizing past data on the national income accounts as reported by the National Economic 1967 prices for 1975 . Development Authority (NEDA), Business Day Research forecasts that the sum total of goods and services produced by, the economy fea 1975 Business Day projects that GNP growth rate at will be at 5.1 per cent over the value of goods and services produced by the^ economy during cal"'idar year 1974. This is 4 I I By sector Projected growth levels for the different sectors of the economy are: agriculture, 6.4 pet cent; mining and quarrying, -52.7 per r nt; manufactu ing, . ' (Continued >n page 4) * BL PROJECTIONS MINING & QUARRYING (527%) P347 OVER A CENTURY OF BANKING Founded in 1851, Bank of the Philippine Islands was estabI lished with a capital of P400.000. Today, Bank of P.l. was I the first to meet the required minimum capital base of I P100 million. I The history of its services is the history of its progress. It I financed the initial development and subsequent expansion __ V of export crops (like sugar, copra, tobacco and abaca), interisland trade and early manufacturing ventures; while assisting the Insular Government by financing public works projects. As a depository of government funds, and having sole authority to issue currency notes, it provided the financial base for trade expansion, extending its branches to Iloilo, Cebu and Zamboanga. In order to survive three foreign administrations, two revolutions, two world wars, the economic recession of the 20's and the Great Depression of the 30's, which all took its toll on our country's economy, the bank had to continue to devise innovative services. The rest is history. •It Today, 124 years later,Bank of the Philippine Islands,with a geographical and financial strength that complemented a restructuring of management specialization to include foreign trade and support for small to medium size enterprises, continues to play an elemental Tole in the country's economic scene. Anniversary FOUNDED 1851 IPAGPATULOY ANG KAUNIARAN. MAG-IMPOK SA BANGKO * f A A r Ipagpatuloy ang Kaunlaran. Mag-impok sa Banko. HEAP OFFICE: ESCOLTA. MANILA MEMBER: PDIC - ■ •. ■ . S’ MEMBER: PDIC r 22 YEARS OF BARANGAY BANKING There’s an aspect of Filipino life which has inspired us through our 22 years in banking. It's the spirit of the barangay. And it means cooperation, doing what’s best for others and being neighborly in every way. That’s why we pioneered private branch banking in the early 50’s, to be of service to as many communities as possible. We called our branches Kapit-Bancos to reflect the kind of friendly service we give. And as the Philippine neighborhood grew bigger, and its financial needs increased, we offered as many commercial services as possible for our clients. Today, the barangay spirit lives on at Republic Bank. We are happy to be among those helping promote a healthy economic climate for the new Filipino. Inspired further by the renewed sense of direction of our country, we will continue to do what’s best for the financial security of all our friends. I And we’ll do it with many, many more years of barangay banking. age 4 Thursday, September 11, 19" Construction, as in previous years, will be a major growth area; agricuture will remain the biggest contributor to the net domestic product. construction, cent; transcommunica£ • S. S OMnie/ntv <£ Cx>, ^y v c . per cent; 14.5 per portation, tion, storage and utilities, 5-4 per cent; commerce, 3.5 per cent; and services, 6 per cent. These projections are based on the premise that there will be a significant economic recovery, especially in external trade, during the last quarter of 1975. Consequently, if the expected recovery does not come about, then the GNP growth rate for the year would be lower. • »< •It it’ SARMIENTO BUILDING NO. 2 PASONG TAMO EXTENSION, MAKATI, RIZAL PHILIPPINES TELS. 87-20-81 TO 92 Deteriorating demand for the country’s major export products, as well as a decline in their values combine with an i n c r e asing balance of payments deficits to place the economy in a bind. There is further threat of another increase in the prices of crude oil by about 10-35 per cent come October. On the other hand, the government’s policy of expanding production levels and its continued emphasis on the generation of more economic activities to counteract the growth slowdown in some sectors will go a long way in sustaining the economy’s growth, thrpngh< out the rest of the year.' ► u THE PHILIPPINE CONSTITUTION, UNDER THE BILL OF RIGHTS, GUARANTEES THE CITIZENS EQUAL PROTECTION TO LIFE AND PROPERTY. Cable Addra wvvmtWnTQ FT-ila er P. 0. Box 226 * A PIONEER INSURANCE COMPANIES PIONEER HOUSE 320 NUEVA NEAR ESCOLTA, MANILA. PHILIPPINES TEL. 40-44-21 Construction • » L*»J I As in previous years, construction will, once again be a major growth area together with agriculture and services. w BD projections place the growth of the construction sector at 14.5 per cent in real terms as compared to last year’s Pl,064 million, for the highest sector increment. Acceleration in both* government and private construction will lift the sector’s contribution to the net domestic product from 1974’s 3.3 per cent to about 3.6 per cent in 1975. • *1 u The government’s public works program for the four-year period ending fiscal year 1979 is allocated P38.78 billion. For FY 1976, total allocations amount to P7.93 billion; for FY 1977, P8.77 billion; for FY 1978, P9.25 billion; and for FY 1979, P11.8 billion. The infrastructure program has a total funding of about P23.26 billion or $2.07 billion on foreign exchange (P7.50 to US$1.00) Agriculture Projected net value added of the comlP*'~‘ BY PRESIDENTIAL DECREE, THERE HAS BEEN PROMULGATED AN INSURANCE CODE TO REGULATE THE INSURANCE INDUSTRY. OPERATING BY VIRTUE OF AND UNDER SUCH AUTHORITIES IS OUR GROUP OF INSURANCE COMPANIES THAT GUARANTEE FULL PROTECTION TO LIFE AND PROPERTY. ■ 1 Thursday, September 11, 1975 Page 5 GROSS NATIONAL PRODUCT, NATIONAL INCOME AND NET DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN: CY 1970 - 1975* (At 1967 prices in million pesos) Growth Rates (%) Industry/ltem 1975* 1974 1973 1972 1971 1970 -s i I 1. Agriculture fishery and forestry 2. Mining & quarrying 3. Manufacturing 4. Construction 5. Transportation Communication Storage and Utilities 6. Commerce 7. Services NET DOMESTIC PRODUCT at factor cost 8. Net Factor income from abroad NET NATIONAL PRODUCT or NATIONAL INCOME 9. Indirect raxes net of subsidies 10. Capital consumption allowance GROSS NATIONAL PRODUCT Bit 10,246 347 7,140 1,218 9,626 - 734 6,755 1,064 9,306 730 6,527 925 8,94 686 5,828 1,014 o 8,934 650 5,497 771 ,962 558 5,108 689 o 1970'71 (0.3) 16.5 7.6 11.9 1971 -'72 1972'73 1973'74 1974'75* 1,459 5,379 8,112 1,384 5,197 7,653 1,298 4,972 7,145 1,217 4,594 6,735 1,154 4,357 6,424 1,063 4,149 6,196 8.6 5.0 3.7 33,901 115 32,413 6 o 30,903 (200) 29,022 (382) 27,787 (310) 26.725 (480) 34,016 3,787 4,937 42,742 32,499 3,617 4,539 40,655 30,703 3,367 4,345 38,414 28,640 2,974 3,999 35,613 27,477 3,057 3,656 34,190 26,245 2,697 3,247 32.191 4.0 35.4 4.7 13.3 12.5 6.2 0.2 5.5 6.0 31.5 5.5 5.4 4.8 4.4 (23.2) 4.2 ( 2.7) 9.4 4.2 4.0 6.4 12.0 ( 8.8) o «o 6.6 .2 6.1 Q O 6.5 47.6 7.2 13.2) 8.6 7.9 3.4 0.5 3.5 15.0 6.6 4.5 7.1 4.9 143.0 5.; 7.4 4.5 5.8 6.4 (52.7) 5.7 14.5 5.4 3.5 6.0 4.5 33.72 4.6 4.7 Q P OtO 5.1 * BD projections Source: NEDA agriculture, fishery and forestry sector is at PIO,246 million, a growth of 6.4 per cent over 1974’s P9,626 million. Agriculture will maintain its position as the biggest contributor to the net domestic product. From a share of 29.7 per cent to the total net domestic product, agriculture is projected to increase its share to about 30.2 per cent in 1975. Jt AgrTcul tur e’s formance about as win <3 a percome result of government’s intensified technical and financial assistance in the production of palay, corn, sugarcane, bananas and even abaca. * % % * * * Phase V of Masagan 99 which was launched last May will involve more than Pl billion worth of clean production loans under the upervised credit scheme. This program will mean total 88 million cavans of palay assuming that the program yields 80 cavans per hectare. f / / > * X Contributing further to the growth of the sector is the fertilizer subsidy which would entail an estimated amount of P350 million and is imed at reducing fertilizer prices by 25 per cent. c Mining Commerce * Most severely affected by depressed world demand and lower export value for its products is the mining sector. contributes about twothirds of the net value added in mining and quarrying. The first semester of 1975 saw the export value of copper concentrate declining by $141.3 million, or 59 per cent, from export value of $237.7 million during the same period last year. Net value added of the mining sector is projected to decline by 52.7 per cent. The sector’s total produce worth P734 in 1974 will noseo an approximate million) this year dive to an P347 A X Last year the mining lector posted a meager 0.5 per cent increment a breath negative over 1973, away from mark. Transportation, Communications ■ - A » The transportation, communication, storage nd utilities sector is projected to expand to Pl,459 million in 1975. This reflects a growth of 5.4 per cent from the 1974 level of Pl,384. The increased pace of investment in the communication and utility areas will be mainly responsible for this growth. However, the anticipated increase in fuel prices during the later part of the year will hit this sector more adversely than the rest. c / A Commerce is projected to improve on its performance last year by 3.5 per cent. Total value added of the sector may hit P5,379 million in 1975. business turnover of the real estate subsector, contributing further to the growth of the commerce sector. However, rising costs of land development will also affect 1 the Clock I the growth of the real estate subsector. Services Net value added in services is projected to hit P8,112 million in 1975, an improvement of six per cent from last year’s P7,653 million. The expanding requirements of the tourism industry will in turn push the growth of the services sector. A major indication of this complementary growth in services is the increase in hotel projects throughout the country. This is most pronounced in the case of copper. The country’s major trading partners early this year announced cutbacks in their purchases of the product which alone > Retail and wholesale increments, hand in hand with tourism gains will be the sector’s w prime movers. Increased infrastructure activities will further push the \ \ ’ \ K I MMMcdg MANILA ELECTRIC COMPANY L. ORTIGAS AVENUE. PASIG. RIZAL. PHILIPPINES usi Thursday, September 11, 1975 i Page 6 9 Period 1974 Total January February March April May June July August September October November December 1975 Total January February March April May June * July * August * September * October * November * December * Source: ureau of Mines • Projections n>1 METALLIC MINERAL PRODUCTION 1974 - 1975 Metallic Mineral Production (P000) 3,597,815 285,703 285,644 394,925 453,147 417,896 333,157 296,458 269,634 216,097 212,824 214,851 217,47 e1 2,208,993 207,725 202,622 233,195 222,767 204,435 184.606 177.273 169.940 162.607 155.274 147.941 140.608 Copper Volume Value (metric tons) 225,485 18,159 17,411 21,117 21,221 20,687 17,999 18,388 18,914 17,304 17,805 □o 17,9' 18,482 213,391 18,693 I 18,887 17,23; 18,287 16,53 18,004 17,724 17,684 17,644 17,604 17,564 17,524 Q O A X A * (P000) 2,793,714 228,371 II 225,40 313,653 371,845 340,167 272,354 232,903 207,855 158,305 151,416 148,14 143,290 o 1,088,879 129,869 124,577 138,603 135,582 o 119,45 93,13 83,082 73,026 62,970 52,914 42,858 32,803 Gold Volume (kg.) 16,682 1,409 1,249 1,689 1,761 1,643 1,352 1,414 1,331 1,17 1,212 1,194 1,243 l Q O 14,010 1,310 1,193 1,321 1,258 1,179 1,161 1,143 1,125 1,107 1,089 1,071 1,053 METAL PRODUCTION JANUARY - MAY 1975 - 1974 Any where. • t This is our kind of service. Before and after the sale. Systematic. Long-term. Putting a lot of meaning in preventive maintenance. That's because you buy performance in our products. And we see to it that you get it. JlHas Copco COMPRESSED AIR CENTER ATLAS COPCO (PHILIPPINES) INC. Copper Gold Sih/er Platinum Zinc Nickel (metal) I ron ore Unit MT k9 kg kg MT MT DMT 1975 B9,643 6,292.9 19,386 9 5,186.94 ) 1,998 577,701 1974 98,595 7,460 23,894 16 2,818 162 786,855 I I % increase/Decrease ( 9.1) (15.6) (18.9) (43.7) 84.1 1,133 (26.6) Source: Bureau of Mines |F. - i Ar * Os AVAWA \ • 2293 P. Tamo Ext., Makati, Rizal • Tels. 88-19-66 • 88-37-03 • 87-32-30 Branch Office: Rm. 201 Franco-Moras Bldg., Highway Mandaue, Cebu Liaison Offices in: Davao • Baguio • Cagayan de Oro With current world copper prices slashed to almost one-half of the 1974 values, and local production for the first five months falling short of usual levels by nine per cent, the contribution to the Gross National Product this year of the mining industry is projected to decline by 52.7 per cent. Business Day Research projects this share at P347 million (at 1967 prices), a 52.7 per cent reduction fro its actual contribution of P734 million in 1974, which, in turn, was a mere .5 per cent increase over the P730 million contribution in 1973. Aside from depressed world copper prices, which caused cutbacks in production, (Consolidated Mines completely stopped copper production as of January this year), mining companies have been groaning under increased production costs. At yearend, total production of copper is estimated to be 213 thousand metric tons, or some 5.36 per cent, less than the actual production of 225.5 thousand metric tons in 1974. Statistics culled from the Bureau of Mines show that in the first five months of 1975, copper production of 89.6 thousand metric tons is a drop of nine per cent fro last year’s level of 98.6 thousand metric tons. Value Value-wise, the declining pattern is even more pro•!• •It •It ii t II II It nounced. In 1974, some 98.6 thousand metric tons of copper produced in the first five months fetched a price of P2.79 million. This year’s January to May output of 89.6 thousand metric tons was valued at only Pl.09 million. This means that in 1974 the average price of one metric ton of copper was P28,345. At present the same quantity is worth only Pl2,147, indicating a drastic price cut of 57.15 per cent. World copper prices for the first eight months of 1975 have averaged $0.57 per pound compared with the 1974 average of $1.04, a drop of 43.70 per cent. The lowest monthly average so far was at $0.52 a pound posted in January this year. As of July, copper prices have been showing signs of recovery. Quotations have inched up to $0.59 per pound from the January figLast month copper prices averaged $0.60 per pound in New York. The August, 1975 price level is only 22.25 per cent (the lowest percentage drop) lower than the 1974 August price of $0.77 per pound. And the August average is a 2.38 per cent improvement over the month before average of $0,587. i h ii II II I I . I ures. II • I A Supply level But as of September 1, 1975, warehouse stocks in II Thursday, September 11, 1975 I r£ New markets - • Production cost •II I I t •I* H'K L ii n •I* ’J uat »n old water on such h - the London Metal Exchange had reached 378,300 metric tons. LME stocks have been continuously rising for the past six months. In the last week of August alone, 14,500 metric tons — the second-largest rise in the market’s history — were added and more are expected. Current stocks of 37 thousand tons are more than double the March stock level when the rise began “in earnest,” and seven times the tonnage in store a year ago. Zambia, one of the world’s major producers of copper (650,000 tons produced in 1974) has serious ) transport problems and delays in shipment. This has triggered speculations on a price increase. However, LME’s warehouse stocks sitis enough to douse Cutbacks in copper imports by Japan have also dampened copper production considerably, but new markets have also been tapped with some success. For instance, Philex Mining Corporation sold 4,000 tons of copper concentrates to China at $0,598 a pound last August 27. The company is set to ship another 4,000 tons sometime this month. Philex said its copper sales to China are expected to make up for their loss in revenue resulting from the 15 per cent unilateral cutbacks on Japanese copper requirements. Lower eami Mid-semester earnings of five mining companies have been reported to have dropped drastically from Atlas, Mar intheir 1974 levels. Philex, Lepanto, duque, and Marcopper have reported sales decreases by ah average of 35.01 per cent. Likewise, their incomes were severely slashed by an average 75.86 per cent and earnings per share dropped by another 79 per cent. i The factors responsible for the mining sector’s weak performance in the first semester will be the same factors responsible for the year’s decrease in its GNP contribution. Another factor is the higher cost of production. Lepanto Consolidated spent Pl57.88 million or 67.02 per cent more than the 1974 first semester expenses of P94.53 million. Lepanto’s (Continued on page 8) ii ATLANTIC, GULF & PACIFIC CO. OF MANILA, INC. Executiveoffices: 131 Ayala Avenue, Makati, Rizal. Tel. No. 89-10-61 Ml San Francisco Office: Hongkong Bank Building, 160 Sansome Street Branches: Bacolod-Davao I Page o Thursday, September 11, 1975 0* The IMF decision to sell one-sixth of its gold holdings have sent gold prices on an expected nosedive. copper production dropped by 29 per cent, gold by 33 per cent, silver by 28 per cent, and lime by three per cent. Production cutbacks were forced on Lepanto by the high level of concentrate inventory resulting from ASARCO’s (American Smelting & Refining) low smelting rate for Lepanto. Marcopper Mining spent some 16.66 per cent more than its 1974 operational cost during the first semester this year, although its total production and exports of copper concentrates were 36 per cent lower than last year. Atlas Consolidated creased its operating expenses by 11.35 per cent from P309.35 million in 1974 to P344.47 million this year. 4 •t •x Burdened by such a situation the mining industry pins its hope on the possible increase in the price of copper. Export performance inMining exports in the first semester were worth only $96.4 million. This is 59.44 per cent lower than last year’s six-month value of $237.7 million. BD Research projects total export earnings from copper this year at only $142.6 million, or 67.73 per cent less than total receipts of .$393.2 million in 1974. Should demand for copper remain at depressed levels, Jts share in the total export pie will consequently decline from 14.4 per cent in 1974 to only 6.1 per cent this year. r» 130 110 90 70 50 0 January February March April May June July August Average: / 4 < • rv&ii J New York Copper Prices US cents/lb. / ■V * /. A z M I i —I1 —T" 1 I F M A M J T J * NEW YORK COPPER PRICES US cents/lb. 197B 1074 A I % Increase Decrease \ Xv X > 51.70 57.40 60.70 56.80 54.50 54.30 58.70 60.10 56.78 7.10 119.10 126.50 125.00 108.00 99.00 86.20 77.30 103.52 o 40.64 51.80 52.02 56.34 49.54 45.15 31.90 22.25 43.70 < ■vw* -**■• a ■ f NW ''e Mt' Venacvo»s - \\nWtf\e k'R mA *we'ie' 0\ W\A?.’'S W s M'u"b V oftW \rf V\\c ' •z /z?Z >"•>’ ■ • * ■ * • • * X K - •. * V.s. X‘*:d>x-, **>;•O-zi: >• • ■' Xs*’ : 4 - ’ .VftV. .f S * ssSX?s s M&' arf 1 ,$o\« cCS sV' . job oW'0’ U\\a\Ws erf Sctrfe'sc covv^'i \U A ’ \W. . rC r a . : v.i OU t Vo^ev ,S«W'S' min *■ -Jtfo \\ \4 V VW ... M*. lHc_ n iV.o ... R^'jLftft rtU?l uYJ , V.v.v .. » i v. I® • ' ’^11^ m q\ rtf"s v VW •• • i. Gold A ) World market prices of gold have fluctuated from February’s peak of $185 per ounce to last month’s quoted average of $161 per ounce. Despite expectations genhigh ’of $198:25 eratetl by Che DecbittBfeY 1974 i. - » «- — — — - _ _ , •» an ounce for the yellow metal, all excitement for gold died down when the expected “gold rush” by Americans failed to reach even fever pitch. By law Americans were allowed to buy and sell gold once again on the market as of end of December. Since 1944 they were barred from doing so. World prices for gold average $172 an ounce in the last eight months of 1975. But last month the price dropped to $160 per ounce. The sharp decline followed reports from Washington that the International Monetary Fund had decided to sell one-sixth of its gold holdings of 150 million ounces. Profits are to go to poor developing countries; the IMF is to return another one-sixth to donor countries. However, London Metal Exchange traders are of the opinion that although the compromise between the Americans and the Europeans on bullion within the monetary system seem to rule out new impetus for gold in the near future, national and international monetary authorities are to see to it that gold prices do not sink below the present market price of $150 per ounce. The official IMF price is $42.22 per ounce. Another reason is the reluctance of some European countries to return to a system of fixed exchange rates as part of the proposed reform of the world monetary system. What these countries want instead is the strengthening of the International Monetary Fund rules on floating of currencies. Floating currencies are those whose relative values II I a change from day to day as dictated by supply and demand. Fixed parities or fixed exchange rates refer to the pegging of one or more currencies to the value of gold # or to one particular currency with a fixed value. Only slight variations are allowed Because of this,..the ^c-'d . bullion price on the Metal Exchange collapses i its lowest point of $148.7i>* an ounce last September 3. Nevertheless, gold price? this year are higher by 14.32 per cent over the 1974 levels. One kilo of the yeb low metal averaged P8,872 in 1974; this year one kilo is valued at P3,872, or P500 more. •It II Gold production 1 ’ It seems then that local gold producers have “guarded optimism” as to the prospects of gold this year. Gold output so far in the first five months reflect restraints on production. Gold production has gone down by 15.6 per cent from last year’s level. From January to May, 1974 gold production reached 7,460 kilos valued at P251.6 million. This year gold mined was only 6,292.9 kilos worth P243.7 million. Benguet Consolidated, the country’s premier gold producer, had a total output of 1,935 kilos worth P75.1 million. Philex mined 1,780 kilos of gold worth P67.6 million. For the whole of 1975, total gold production is estimated at 14,010 kilos, a decrease of 16.02 per cent from the actual gold production -of 16,682 kilos last year. II Other metals II * Production of silver, platinum and iron ore also declined in the first five months this year compared with last year: silver by 18.9 per cent, platinum by 43.7 per cent, and iron ore by 26.6 per cent. Only zinc and nickel production posted increases, zinc by 84.1 per cent and nickel by 1,133 per cent. L» t *