Economic growth slowing down

Growth in the Philippines is slowing this year, after peaking to 7.3 percent in 2010, based on advanced information on the direction of the country’s economic activity.

“After six consecutive quarters of upswing that started in the fourth quarter of 2009, the composite leading economic indicator slid slightly in the second quarter of 2011,” the National Statistical Coordination Board said.

The composite leading economic indicator, representing 11 economic signals, is used as basis for short-term forecasting of the macroeconomic activity in the country. The indicators expand in general when business is growing and contract when business is shrinking.

NSCB said the indicator slid to 0.103 in the second quarter of 2011 from a revised 0.115 in the first quarter of 2011. This indicated “a possible slow down of economic activity for the quarter.”

Of the 11 indicators that make up the composite LEI, only five contributed positively, including merchandise imports, wholesale price index, consumer price index, tourist arrivals, and stock price index.

The combined share of positive contributors for the second quarter decline to 47.1 percent from 57.7 percent in the first quarter.

Negative contributors in the second quarter were terms of trade index, number of new businesses, money supply, hotel occupancy rate, foreign exchange rate and electric energy consumption.

These negative contributors accounted for 52.9 percent of the total.

The National Economic and Development Authority has kept its annual growth target of 7 to 8 percent for the next six years.

However, Economic Planning Secretary Cayetano Paderanga Jr., who serves as the Neda director general, conceded that the government was reviewing the economic assumptions for 2011, in the light of the recent global developments.

Rising oil prices also hit consumer sentiments in the first quarter of 2011, according to a survey conducted by Bangko Sentral.

The consumer outlook was aggravated by the tensions in the Middle East and North Africa, said Bangko Sentral Deputy Governor Diwa Guinigundo.

Consumers were expecting interest and inflation rates to go up in the next 12 months as the continued rise in world oil prices is expected to put upward pressure on the prices of basic commodities.

Paderanga said the Philippines needed to achieve a high and sustained growth path that would benefit the poor.

The government has committed to achieve the Millennium Development Goals, or MDGs, which refer to a set of specific and time-bound development goals committed by international governments by 2015.  –Roderick T. dela Cruz, Manila Standard Today