Philippines to grow 5-6 pct in 2012, govt economic managers predict

NEWS ANALYSIS

MANILA: Economic managers of the Philippine government have said that the country’s gross domestic product ( GDP) would grow by 5 to 6 percent this year despite uncertainties in the global economy.

According to Economic Planning Secretary Cayetano Paderanga, this slightly higher GDP growth could be achieved through increased government spending and the full implementation of the public-private partnership (PPP) program of the Aquino administration.

The government’s full-year growth forecast for 2011 is from 4.5 to 5.5 percent although multilateral lending institutions have pegged the country’s growth last year from just 3.7-3.8 percent.

The government is not expected to release the official growth figures for 2011 until the end of this month.

Paderanga, who is also the director general of the National Economic and Development Authority (NEDA), cited the 72-billion- peso (1.64 billion U.S. dollars) stimulus spending program and reforms in project implementation as the major contributing factors to this year’s growth.

Earlier, Governor Amando Tetangco, Jr of the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has said that the sound macroeconomic fundamentals of the Philippines would play a major role in helping the country survive the global economic slowdown and the debt crisis in Europe.

In a forum, Tetangco said the Philippines would remain strong in 2012 on the back of strong private consumption and higher investments.

“Our assessment is that the country’s structural economic make- up is self-sustaining. Against a backdrop of sound macroeconomics fundamentals, we believe domestic demand will remain a major contributor to growth. Nevertheless, we are not immune from the risks,” he stressed.

Tetangco cited as a major risk a slowdown in China that could result in the loss of a critical driver of growth not only for the region but also globally.

The country’s GDP slackened to 3.2 percent in the third quarter of 2011 from 7.3 percent in the same quarter in 2010 bringing to 3. 6 percent the GDP growth in the first three quarters of last year.

Obviously, the government has learned its lessons by not projecting higher growth and setting only moderate figures this year. Early last year, the government said that they expected the country to grow by 7-8 percent.
Some economic analysts have projected lower growth for the Philippines this year.

Reports have quoted Cid Terosa, an economist at the University of Asia and the Pacific, as saying that the local economy would grow from 4.5 percent to 5 percent this year. He added that he would be “pleasantly surprised” if the growth this year would exceed 5 percent.

Professor Benjamin Diokno of the School of Economics of the University of the Philippines said that a GDP growth of 4 percent to 4.5 percent this year, which is what he forecast, is “unacceptable” with the “high and rising inequality and rapid population growth in the country.”

Economists have warned that without strong consumer spending and private investments, growth would remain at low levels and this would stymie government efforts to curb poverty and spread income opportunities, particularly among marginalized Filipinos.

In its latest Philippine Quarterly Update (PQU), the World Bank said the country’s GDP growth last year would be only 3.7 percent while growth in 2012 is projected to improve to 4.2 percent.

But the World Bank cautioned that higher 2012 growth hinges on improvement in exports, acceleration of public-private partnership projects and private sector investment and a full recovery of public spending.

For its part, the Hong Kong and Shanghai Banking Corporation ( HSBC) said that the Philippine economy would grow by just 3.6 percent in 2011 and this year, down from the 4.3 percent and 4.8 percent respectively it announced in October.

“The main reason for the downward revision is the weak global economic backdrop. We see that global economic headwinds will persist in 2012,” the HSBC said.

The HSBC said Philippine growth will be the second slowest in ASEAN that includes Indonesia, Malaysia, Singapore, Thailand and Vietnam.

Indonesia is seen to post the strongest GDP growth of 6.5 percent and 6.1 percent for 2011 and 2012, respectively. The Philippines, however, will still be ahead of Thailand’s growth of 1.7 percent and 4.0 percent.

Meanwhile, the Philippine peso is expected to trade at 45.50 to the dollar in the first quarter of 2012 as it would fail to resist the current of eroding legal tender in Asia, according to DBS Group of Singapore.

In its latest quarterly report on the global market outlook, the DBS Group said the Philippine currency “is unlikely to buck the trend of weaker Asian currencies” this year despite a relatively strong showing in 2011.

In fact, the peso has already breached the 44 pesos to 1 U.S. dollar rate, closing on Friday at 44.13 pesos to 1 U.S. dollar. –Alito L. Malinao, Xinhua News Agency