Economic indicators show fastest contraction in nine years

THE Philippine economy may have slowed down further in the fourth quarter of 2009 as the composite leading economic index (LEI) contracted at its fastest pace in nine years, the National Statistical Coordination Board (NSCB) said.

Romulo Virola, NSCB secretary general, said the LEI contracted 0.640 from October to December last year from a revised negative 0.570 in the third quarter. In the same period last year, the LEI recorded a growth of 0.256.

The leading economic index serves as a basis for short-term forecasting of macroeconomic activity as it incorporates the behavior of indicators that consistently move upward or downward before the actual expansion or contraction of the economy.

But Virola said that the descent of the index continued to decelerate “confirming earlier signs of the gradual recovery of the economy from the global crisis.”

“Not to be forgotten though are the damages brought by typhoons Ondoy and Pepeng in the last quarter of 2009, which have not been reflected in the latest LEI,” Virola said.

The National Economic and Development Authority (NEDA) estimated that the damages and losses caused by the two typhoons have reached P206 billion.

The NSCB official said the negative contributors to the LEI still outweigh the positive contributors, which accounted for 65.9 percent share of total contribution.

The negative contributors to leading economic index were stock price index, terms of trade index, hotel occupancy rate, and foreign exchange rate and terms of trade index.

The positive contributors, on other hand, are the consumer price index, money supply, electric energy consumption, tourist arrivals, total merchandise imports, number of new businesses, and wholesale price index.

Despite the increase in the number of positive contributors, their share to total remains low at 34.1 percent from 32 percent in the third quarter.

Acting Socioeconomic Planning Secretary Augusto Santos had said the economy, as measured by the country’s gross domestic product (GDP), may have grown 0.9 percent, fueled by Christmas and early election related spending.

For the first three quarters, the economy expanded by only 0.7 percent.

For the whole year of 2009, the government expects that the economy may have grown 0.8 percent to 1.8 percent. By the end of this year, the GDP may accelerate to 2.6 percent to 3.6 percent on the back of healthy remittances, government spending and the election spending. –DARWIN G. AMOJELAR SENIOR REPORTER, Manila Times