Economists warn of weaker full-year

ECONOMISTS said the Philippines’ slowdown in the first quarter augurs weaker growth for the rest of the year.

In a market commentary, Sherman Chan, an economist at HSBC, said a further moderation in growth is expected in the second quarter, as household consumption would eventually lose a bit of steam.

Chan said economic linkages with Japan mean that recent disasters will have a negative impact, albeit temporary, on trade and investment.

“The government’s growth target of 7 percent to 8 percent has always seemed to be a huge challenge, barring recent events in Japan and the Middle East. We expect the 2011 annual growth rate to come in at a slower but still-healthy 5.4 percent,” she said.

In a separate commentary, Prakriti Sofat, Barclays Capital economist, said the bank has maintained its 2011 forecast of 5 percent growth despite the deceleration in the first three months of the year.

Separately, Benjamin Diokno, a former budget secretary who teaches economics at the University of the Philippines, said the full-year target “now appears to be unreachable.”

“The full year outlook is not rosy. The first quarter numbers are history. They are likely to be repeated in the second quarter, however. Government under spending, especially for infrastructure projects and social overhead (school buildings, for example) persisted. Two months of the second quarter are gone, and the rainy season has officially started. The bulk of public construction may have to wait after the rainy season [sometime in November and December],” the UP professor said.

He said the government “should design a program that would put the administration back on a strong recovery path, recognizing that from here on, it is their responsibility, not anybody else, on how the economy will perform in the days, weeks, quarters and years ahead.”

He called on the government to “improve dramatically” its management of the economy, and to put an end to the “blame game.”

“The task of documenting, building a case and prosecuting past plunderers and corrupt officials should be left to one group, consisting of forensic experts, auditors, and lawyers.

Another group should focus on building and narrowing the infrastructure gaps. Another group should focus on fundamental reforms, looking for solutions to problems that ail the Philippine economy and society. Others still should work on the best ways to manage the reform. All these require concerted efforts, hard work and perseverance,” he said, adding that the Executive had been slow in implementing existing programs. –With reports from Lailany p. gomez and Darwin G. Amojelar, Manila Times