NEDA sees ‘09 expansion at high-end

THE Philippine economy is likely to grow at the high-end of a government target this year driven by election related spending and the planned front-loading for infrastructure projects, the National Economic and Development Authority (NEDA) said.

In a briefing, Dennis Arroyo, director of NEDA’s national planning and policy staff said the agency is more “optimistic” to meet the high-end target of gross domestic product (GDP) growth for this year.

A proxy for economic output, GDP refers to the total value of goods and services produced in a country.

“We are targeting a 4 percent. I think we can do it because of the recent developments,” Arroyo said.

The Development and Budget Coordinating Committee (DBCC) expects the economy, as measured by its GDP to expand between 3.1 percent and 4.1 percent this year.

“The first quarter [growth] could be the lowest and would pick up in the second quarter to fourth quarter,” Arroyo said.

He said the growth from the second to fourth quarters would be due to the early pre-campaign spending of the political candidates for the 2010 elections and the government’s P330 billion Economic Resiliency Plan.

“There’s no way that our economy will contract,” he said.

He also projects remittances from overseas Filipino workers to “go beyond zero growth,” which was the conservative projection of the DBCC.

The official said that inflation could further slow down, reaching zero by July and August because of base effects, when consumer prices inched up during that period last year on high prices of rice and oil.

Arroyo said the central bank could further cut interest rates and domestic tourism and real estate could post further growth.

Earlier, Socioeconomic Planning Secretary and NEDA Director General Ralph Recto said the economy in the first quarter may slow to between 2.1 percent and 3.1 percent.

The NEDA’s projection was lower than the 5.2-percent expansion in the same period last year.

The National Statistical Coordination Board projected that the economy may have contracted in the first quarter of the year, citing the negative growth of its composite leading economic index (LEI).

The agency said the LEI continues its downward streak in the first quarter to negative 0.075 from positive 0.210 in the fourth quarter last year, signifying a deceleration in the domestic economy.

The International Monetary Fund earlier projected that the economy is likely to post a zero growth this year, while the Asian Development Bank and the World Bank projected 2.5 percent and 1.9 percent, respectively.

The Philippine economy grew 4.6 percent in 2008 from 7.2 percent in 2007, the highest in three decades.
— Darwin G. Amojelar, Manila Times