THE Philippine economy could grow by 4.2 percent this year—beyond the official government forecast of 2.6 percent to 3.6 percent—with election spending directly triggering a 0.5-percent growth, economist Dr. Victor Abola said.
Abola, director of the University of Asia and the Pacific (UA&P)Strategic Business Economics Program, said that while the 0.5-percent direct contribution may seem small, election spending also has multiplier effects in economic activities that will be felt even after the May elections.
For the first semester of the year, Abola said gross domestic product (GDP) would range from 3.5 percent to 4.5 percent.
“My estimates already factored in a negative 4-percent growth in agriculture because of El Niño, which is already extreme,” Abola said.
The Development Budget Coordination Committee (DBCC) pegged the government’s official full-year GDP forecast at 2.6 percent to 3.6 percent.
The Philippine Institute for Development Studies (PIDS) full-year estimate is 4 percent, while the World Bank projection is 3.5 percent.
Abola said that besides election spending, the economic drivers for the year include the continuing strength of the construction sector, both in public infrastructure and private residential and commercial developments.
Exports are also expected to recover strongly due to 2009’s low base.
Abola said merchandise exports, after suffering a 22-percent decline in 2009, could expand by 20 to 25 percent for 2010.
“If not [for] a stronger peso lingering at the P45.40-to-P46.75 range versus the dollar, exports would register higher growth numbers,” he said.
The mining sector, he said, will also contribute immensely to the economic expansion this year.
Abola said his projection also took into consideration the consensus estimates released by Bloomberg, as well as the forecasts of key institutions, such as the International Monetary Fund and Morgan Stanley. –Max V. de Leon / Reporter, Businessmirror