NEDA forecasts slower growth in the third quarter

The Philippine economy is likely to grow at a slower pace in the third quarter, the National Economic and Development Authority (NEDA) said.

“The third quarter GDP will be lower than the second quarter,” acting Socioeconomic Planning Secretary Augusto Santos told reporters on the sidelines of the signing of the public-private sector cooperative agreement for disaster recovery and reconstruction.

An indicator of economic performance, GDP or gross domestic product is the value of all final goods and services produced in the country.

In the second quarter, the economy grew 1.5 percent, down from the 4.2-percent expansion in the same period last year. The second-quarter performance led the Philippine GDP to grow by 1 percent, lower than the 4 percent in the same period last year.

The National Statistical Coordination Board (NSCB) earlier reported that its composite leading economic index (LEI) in the third quarter remained at negative 0.113 from the 0.136-contraction in the second quarter of the year.

The LEI 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.

“We will maintain our 0.8-percent to 1.8-percent growth target this year despite the dampening effect of the typhoons Ondoy and Pepeng,” Santos, however, said.

To date, the government said both weather disturbances caused about P30 billion worth of damages mostly on infrastructure and the farming sector. Ondoy cost the economy P11 billion while Pepeng dealt a heavier blow at P19 billion.

Santos attributed the optimistic projection for the full year to the robust overseas Filipino worker (OFW) remittances and the reconstruction programs of both the private and public sectors.

Money sent home by Filipinos working abroad has bucked forecasts of a contraction, leading the Bangko Sentral ng Pilipinas to revise upward its projection to as much as four percent from an earlier flat growth estimate.

In the first eight months this year, remittances have grown by 3.7 percent.

The NEDA chief said the reconstruction would have a “positive effect” on the economy. Congress earlier approved a P12-billion supplemental budget for the purpose.

The government is also asking foreign donors to realign project loans already granted to the reconstruction effort. It is organizing a dialogue with them next month.

This early, the World Bank has indicated it is open to realigning as much as $400 million in approved loans for the post-typhoon reconstruction. –Darwin G. Amojelar, Senior Reporter, Manila Times