Storms slowed Q4 growth

Leading indicators point to an economic recovery in the fourth quarter of 2009, but the impact of typhoons Ondoy and Pepeng restrained the pace of expansion in the last three months last year.

The National Statistical Coordination Board said its composite leading economic indicator, which measures economic trend, slid further to negative 0.640 in the fourth quarter of 2009 from a revised negative 0.570 in the third quarter.

“However, 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, is the damage caused by typhoons Ondoy and Pepeng in the last quarter of 2009, which have not been reflected in the latest LEI,” the agency said.

The LEI is represented by 11 indicators that include money supply, new businesses, terms of trade index, merchandise imports, tourist arrivals, electricity consumption, foreign exchange rate, stock prices, inflation, hotel occupancy and wholesale price.

The indicator serves as basis for short-term forecasting of the macroeconomic activity in the country. It is based on an empirical observation that the cycles of economic data series are related to those of total business activity and that they expand in general when business is growing and contract when it is shrinking.

The country’s gross domestic product grew just 0.7 percent in the first three quarters of 2009. The National Economic and Development Authority sees a 0.9-percent growth in the fourth quarter that will bring the full-year average to 0.8 percent, which represents the lower end of the government’s growth forecast for the year.

The NSCB is scheduled to release the national income accounts, containing GDP and gross national product growth figures, on Jan. 28.

While the overall indicator remained at negative territory, the statistical board noted that the number of positive contributors climbed to seven in the fourth quarter, from only three in the first quarter and second quarter, and four in the third quarter.

The positive contributors in fourth quarter in order were 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 contribution remains low at 34.1 percent from 32.0 percent in the third quarter. –Roderick T. dela Cruz, Manila Standard Today