Growth to pick up in second half—Neda

Economic growth in the Philippines is expected to pick up in the second half of 2009 on the back of higher consumer spending, an official of the National Economic and Development Authority said.

“We see fears abating on the consumption side,” Dennis Arroyo, director of Neda’s policy and planning, said.

Personal consumption expenditure, which accounts for about two-thirds of the gross domestic product, rose 0.8 percent year-on-year in the first quarter of the year, the slowest in more than a decade.

It rose 2.2 percent in the second quarter but it was still a deceleration from the 4.1-percent growth recorded year-on-year.

Data showed that Filipinos cut their spending for beverage as well as clothing and footwear this year. Spending for beverages fell 11.9 percent in the second quarter from a year ago while demand for clothing and footwear dropped 24.3 percent.

“The PCE is expected to rise in the third quarter and the fourth quarter,” Arroyo said.

International institutions such as investment bank Goldman Sachs predicted a better economic performance of the Philippines in the second half of the year, buoyed by continuous inflows of remittances.

Remittances from migrant Filipino workers rose 9.3 percent year-on-year in July 2009, its fastest rate of increase this year, helping the country achieve a balance of payments surplus and supporting the value of the peso against speculations.

Bangko Sentral reported that remittances hit $1.5 billion in July 2009, bringing the total figure in the first seven months of the year to almost $10 billion, up 3.8 percent on year.

The rise in remittance inflows was much better than the flat growth projected by the central bank for the whole year.

Remittances, which account for more than 10 percent of the gross national product, power growth in such sectors as banking, property, tourism, education and health care.

Also contributing to expectations of higher consumer spending are the low interest rates and the 22-year-low inflation rate. –Roderick T. dela Cruz, Manila Standard Today