Think-tank: Philippines to grow 5.7% to 6% in 2012

MANILA, Philippines – Stronger domestic spending in the second half of the year will allow the Philippine economy to post a growth of 5.7% to 6% by the end of 2012, according to a local think tank.

In the October issue of Market Call, think tank FMIC and UA&P Capital Markets Research said gross domestic product (GDP) will get a boost from stronger Overseas Filipino Worker (OFW) remittances and higher national government spending.

FMIC and UA&P Capital Markets Research added that the economy will be able to post a growth of 5% to 6% in the last quarter of the year, on the back of stronger OFW remittance inflows.

Apart from these, the report stated that inflation will continue to be low and average 3.4% in the third quarter and 3.5% in the fourth quarter. With this, the think tank said a 25 basis points cut in the Bangko Sentral ng Pilipinas’ policy rates is possible in the last quarter of 2012.

“September-December of this year should be very good months for the Philippine economy, as it will be driven by solid domestic demand especially with the National Government (NG) having much fire power to spend for the rest of the year, and OFW remittances remaining robust,” the think tank said.

“We think the economy will have a full-year growth of 5.7 – 6%, with an outside change for exceeding the ceiling,” it added.

Jobs still lacking

Instead of posting an increase in jobs generation, particularly in the first half of the year when economic growth strong at 6.1%, the economy even lost close to 0.5 million jobs as of July this year.

FMIC and UA&P Capital Markets Research said this is a concern since the lost jobs belong to the Agriculture sector, where many of the poor Filipino’s are. The think tank said the sector lost as much as 483,000 jobs as of the July Labor Force Survey (LFS).

This affected jobs generation, particulary in the July LFS data, showed only 478,000 new jobs were created in July 2012. In April 2012, some 1.2 million new jobs were generated.

“Although affected by the downward seasonal factor that July has, the huge gap between July and April’s net new jobs of 542,000 should be a concern for further job generation.”

“We remain optimistic, however, for better job counts as the Industry and Services sectors continue to
expand due to expected higher NG spending in the second half, higher tourism arrivals, and relatively stronger investment from abroad, which should fuel the second half’s employment generation,” the think tank said. – Rappler.com