Phl economy grows 6.1% in H1

MANILA, Philippines - With increased government spending and investments spurring economic activities in the second quarter, the country’s gross domestic product (GDP) sustained its growth track as it expanded 6.1 percent in the first semester, the government’s chief economist said yesterday.

In a press briefing, Socioeconomic Planning Secretary Arsenio Balisacan said aided by a strong second quarter, the Philippine economy remained among the fastest-growing in Asia, outperforming most of its neighbors.

He reported that the domestic economy accelerated in the second quarter to 5.9 percent – well above the average market forecast of 5.3 percent – from a moderate 3.6 percent recorded the previous year, boosting the first semester growth to 6.1 percent from 4.2 percent. 

He said the second quarter performance validates the strong 6.3 percent growth recorded in the first quarter. The firm domestic demand and an improving export sector is expected to stimulate the economy’s production sectors, particularly agriculture and industry, in the next two quarters, he added.

“The brighter economic outlook supported by increased business confidence, strong employment creation, and accelerated government spending all contributed to the continued resurgence in economic activities,” he said.

Balisacan pointed out that the strong growth was in large part due to the “accelerated public investment, as well as a recovery in capital formation.”

He noted that government spending on public construction, which was a main culprit in the growth slowdown last year, grew by 45.7 percent in the second quarter, while capital formation grew 2.3 percent, a turnaround from a decline of 10.5 percent in the same period last year.

“The capital formation figures strongly suggest that investments, which had been negative in previous quarters, has bottomed out, and that growth in capital formation is resuming,” he added.

Balisacan also stressed that growth for the quarter was buoyed by government’s conditional cash transfer (CCT) spending which supported consumption, low inflation which kept household consumption stable, better exports performance, continued credit expansion, buoyant tourism sector, sustained overseas Filipino remittances, increased business and consumer confidence, and an overall positive domestic outlook.

Within the ASEAN, the Philippine economic growth performance was above the preliminary average growth (4.7 percent) of the region, growing faster than Malaysia (5.4 percent), Thailand (4.2 percent), Vietnam (4.4 percent), Singapore (two percent), but lower than Indonesia (6.4 percent). All of these, however, was overshadowed by China’s robust GDP growth (7.8 percent).

Balisacan, who is also director general of the National Economic and Development Authority (NEDA), said with the 6.1 percent first semester growth and inflation kept close to the lower bound of the Bangko Sentral ng Pilipinas’ target of three to five percent, “we maintain our view that the full-year 2012 real GDP growth rate projection of five to six percent; perhaps the higher end of the target is well within reach.”

In Malacanang, the government vowed to continue accelerating spending and improve other sectors to further boost economic growth amid global uncertainties.

“We continue to diversify our exports to different countries. But we know that, in the case of Europe, there are certain things that could happen that might make things difficult,” Presidential Communications Development and Strategic Planning Office Secretary Ricky Carandang said.

Balisacan said the government remains vigilant about risks to growth, citing further weakness of a struggling global economic recovery to remain a strong challenge in the near-term, particularly with the slowdown of China reining in on global growth.

“In the light of these prevailing global economic conditions, risks to the external trade of the country have increased, although these could be cushioned partly by the increased diversification of our exports. Worth noting is the strong performance of agricultural exports and other intermediate goods exports. The intensification of the euro zone problem and the geopolitical uncertainty are also external risks which can cause spikes in the world price of oil,” he said.

He cited another downside risk is the El Niño phenomenon, which, according to experts, will commence on the third quarter of the current year until the first quarter of 2013.

“Notwithstanding these challenges, the government stands ready to support growth. For one, our economy remains cushioned and resilient with sound macroeconomic fundamentals. In addition, government will continue to accelerate spending particularly on critical infrastructure projects,” Balisacan pointed out. - – With Aurea Calica

PH outperforms Asian neighbors, but not China

Philippines is among the fastest-growing Asian economies for the first half of the year, so far topped only by China and Indonesia, the country's chief state economist claimed Thursday.

Socioeconomic Planning Secretary Arsenio Balisacan said the announced gross domestic product (GDP) growth of 5.9 percent from April to June showed the Philippines' "continued resurgence in economic activities from a moderate growth of 3.6 percent in the same period in 2011."

With its strong second quarter result, the Philippine economy posted growth of 6.1 percent January to June, outperforming most its neighbors, Balisacan said.

"Within the ASEAN (Association of Southeast Asian Nations), the Philippine economic growth performance was above the preliminary average growth (4.7%) of the region..." he noted.

The Philippine economy grew faster compared to Malaysia, which posted an expansion of 5.4 percent in the first half; Thailand, 4.2 percent; Vietnam, 4.4 percent; and Singapore, 2 percent.

However, its GDP growth was lower than that of China at 7.8 percent and Indonesia at 6.4 percent.

Bulk of the country's economic growth in the second quarter was due to expansion in the services sector, including the continuously growing business process outsourcing industry, official data showed.

The sector grew by 7.6 percent from April to June, and contributed 4.3 percentage points to the 5.9-percent total GDP growth.

The top contributors to growth in this sector were increased economic activities in transportation, storage and communication; real estate and renting; as well as trade and financial services, among others.

Industry, meanwhile, contributed 1.5 percentage points to the total, growing by 4.6 percent.

This was due to a boom in construction; electricity, gas and water supply; as well as manufacturing. These offset a contraction in mining and quarrying.

Agriculture posted the slowest growth of 0.7 percent in the three-month period, contributing only 0.1 percentage points to the GDP growth.

Balisacan noted that the government expects the Philippine economy to continue growing over the next two quarters.

"We are optimistic that the resiliency of our economy, as reflected by the strong real GDP performance in the two quarters of 2012, will not dissipate in the succeeding quarters despite the uncertainties," the Cabinet official said.

He added that the government is maintaining its full-year growth target of 5 to 6 percent.

This, as he noted that external and internal risks continue to pose threats to the local economy.

"Further weakness of a struggling global economic recovery will remain a strong challenge in the near-term, with the slowdown of China reining in on global growth," Balisacan said.

He also cited the potential impact of an intensification of the euro area problem.

"Another downside risk is the El Niño phenomenon, which, according to experts, will commence on the third quarter of the current year until the first quarter of 2013," Balisacan said.

He added, however, that its impact onthe GDP will be weak to moderate.

Recent weather disturbances which hit the country will also have very small impact, which Balisacan estimated at only 0.5 percent of GDP.

By Kim Arveen Patria, Yahoo

Philippines seen better positioned in ASEAN

THE PHILIPPINES is expected to face relatively stable growth prospects well into next year, being less exposed to global markets than its more developed peers in the Association of Southeast Asian Nations (ASEAN), a research note of UBS Securities Pte. Ltd. showed.The paper, dated Aug. 1 and titled: "ASEAN: how deep are those pockets?" noted that "global economic and financial conditions are not normal."

"So although domestic financial conditions remain conducive, export and commodity market prospects are likely to sap the willingness of ASEAN households and firms to keep spending," read the note, which was made available to reporters yesterday.

It noted further that "ASEAN’s healthy financial balances have been providing some insulation, but do not mean immunity, from the weak external environment…"

UBS explained that a combination of a global environment that is now no longer seen to improve this semester "to the degree we expected" and shrinking net transfers and income from abroad that would otherwise have provided sufficient elbow room to back domestic spending prompted it to cut its growth projections particularly for Malaysia, Singapore and Thailand.

While the note had minimal remarks on the Philippines, a table on the five ASEAN members covered showed UBS had kept original 2012 and 2013 growth projections only for Indonesia (6.0% this year and 6.1% next year) and the Philippines (4.5% and 4.7%, respectively).

UBS kept Malaysia’s growth outlook at 4.0% this year but downgraded that country’s projection next year to 4.5% from an original 5.3%. It also downgraded projections for Singapore (2.0% from 3.0% this year and 4.5% from 5.0% next year) and Thailand (5.5% from 6.0% and 4.5% from 5.5%, respectively.)

UBS noted that Southeast Asian "fiscal and monetary policy makers have flexibility to provide stimulus".

But while it said that "lower interest rates are possible in the Philippines", UBS said "more negative economic news…than we anticipate would be required to push the central bank to ease [policy interest rates] again."

The Bangko Sentral ng Pilipinas (BSP) has so far cut key rates by a total of 75 basis points since the year began to the current historic lows of 3.75% and 5.75% for overnight borrowing and lending, respectively. In doing so, BSP noted the country’s manageable inflation outlook gave it room to cushion the economy from a protracted global economic downturn.

The central bank also cited the need to stem capital inflows that have helped drive the peso to strengthen nearly 5% over its level at the start of the year, even as the local currency yesterday shed 8.5 centavos to the dollar to close at P41.85 from Wednesday’s P41.765 finish.

UBS added that while "fiscal policy is loosening…we do not anticipate additional stimulus outside the budget cycle."

It also noted that "several infrastructure projects are due to be tendered, with the possiblity of some growth impact in 2013."

Philippine gross domestic product (GDP) grew by a surprising 6.4% in the first quarter, a performance state economic planners say was likely maintained from April to June. Second-quarter data is expected to be reported this month. The Development Budget Coordination Committee has projected GDP to grow 6-7% in 2013, 6.5-7.5% in 2014, 7-8% in 2015 and 7.5-8.5% in 2016. 

- BW Online