Philippine economy likely grew 5% in Q1 – think tank

Rappler.com
Citing improved jobs data, increased government spending, exports recovery, and benign inflation, the FMIC-UA&P Capital Market Research Center says a growth of 5% or more is possible

MANILA, Philippines – The Philippine economy likely grew by  at least 5% in the first quarter, according to a rosy projection of think tank First Metro Investment Corp.-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research Center.

Citing improved jobs data, increased government spending, exports recovery, and benign inflation, the FMIC-UA&P Capital Market Research Center said in its latest issue of Market Call that a growth of 5% or more is possible.

“Economic data made available in the first quarter would indicate a much improved economy, which lead us to forecast Gross Domestic Product (GDP) growth of 5% or more,” it said.

It added that the optimistic outlook data was supported by the latest Leading Economic Indicators (LEI) released by the National Statistical Coordination Board (NSCB).

Leading indicators

The NSCB data showed that 8 out of the 11 economic figures positively contributed to the overall LEI, which reached 0.285, the highest level since the fourth quarter of 2008.

“For the first quarter of 2012, the LEI posted 0.238 from a revised 0.158 in the fourth quarter of 2011. The latest LEI computations show the index in firmer positive territory auguring well for the domestic economy to start off the year of the dragon,” the NSCB earlier said.

It cited higher electricity sales, one of the leading indicators, by power distribution giant Manila Electric Co. (Meralco). Electricity sales in February grew by 8% year-on-year, after growing 8.6% in January.

Of the total sales, electricity sales of the industrial sector led the expansion with a double-digit growth of 11.5% in February.

Revenues and spending

It also noted that government spending has accelerated, starting the year on a right footing.  

“President Aquino and his financial team appear to have begun the year on a right footing. January registered a deficit of P15.9 billion compared to a surplus of P12.4 billion a year ago, reversing what some quarters claimed as under spending,” it said.  

It also noted that the main revenue collecting agencies — the tax and customs agencies — have missed targets, but other government revenue sources have plugged the gap.

“Although total revenues were down by 7% due to a large fall in income of the Bureau of the Treasury, tax revenues were up by 12.7%. Total expenditures, on the other hand rose by 16.2%, much of which was account for by interest payments,” the report said.
 
Inflation, jobs

The think tank noted that the improved numbers on jobs and inflation — two of the issues Filipinos find important, according to a latest Pulse Asia survey.

FMIC-UA&P said the economy produced 1.1 million jobs while inflation in February slid to 2.7%, the lowest rise since October 2009. Inflation was even slower at 2.6% in March.

However, the Center cautioned that a rapid increase in crude oil prices remains a threat to prices of goods and services.

High oil prices could also hamper the economic recovery of key trading partners, including the US.   

Previously, Energy Secretary Rene Almendras said the government would be worried when crude oil prices go above $100 per barrel for West Texas Intermediate (WTI) and above $120 per barrel for Dubai Light.  

This explains the slowdown of hot money inflows into developing countries in Southeast Asia including the Philippines, the Center said. – Rappler.com