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MANILA, Philippines – The impact of the heavy rain and flooding in August likely weighed on the Philippine economy’s growth in the third quarter of the year, an economist said.
In the University of Asia and the Pacific-First Metro Investment Corp.’s Market Call report, UA&P professor Victor Abola said third-quarter gross domestic product (GDP) growth likely slowed down to 5.3% from 5.9% in the second quarter.
Abola explained the growth was “not so weak” because of a low base. GDP growth in the third quarter of 2011 was 3.2%, the slowest quarterly growth recorded that year.
Abola was confident, however, that growth will recover in the fourth quarter. He said growth in this period could be higher than 6% on the back of higher government spending for infrastructure, and the start of election spending.
“The prolonged negative impact of the heavy rains and floods in August will certainly result in a slightly slower GDP growth in Q3, but a strong recovery is expected in Q4, as the national government plans to accelerate infrastructure and other capital outlays, and private firms are reporting slightly better-than-expected earnings in Q3,” Abola said in the report.
The UA&P-FMIC Capital Market Research Center still believes the Philippines is on track to become a tiger economy within 10 years.
The local think tank said the recent growth forecast upgrades of multilateral lenders International Monetary Fund (IMF), World Bank (WB), and Asian Development Bank (ADB) are proof of this.
It said ADB, which usually gave conservative growth estimates for the country, was the most positive of the 3 international organizations. ADB recently revised its 2012 growth forecast for the Philipppines upward to 5.5%.
The think tank also said that the move of the Monetary Board of the Bangko Sentral ng Pilipinas to cut policy rates by 25 basis points also supports the growth outlook.
“A spate of positive external and internal assessments in late October upheld the growing and widespread belief that the economy is grounded on solid footings and is likely to be in the throes of becoming a tiger economy in the current decade,” the it said. – Rappler.com