Steady GDP growth for all of 2012 seen

By Jennifer A. Ng, BusinessMirror

Posted at Sep 14 2012 07:59 AM | Updated as of Sep 15 2012 01:35 AM

MANILA, Philippines - The country’s economy will remain healthy for the rest of the year, with full-year growth seen at 5.5 percent to 6 percent on the back of strong domestic consumption and continuous government spending, according to a report of a local think tank.

First Metro Investment Corp. (FMIC) and University of Asia and the Pacific’s (UA&P) Capital Market Research said the country’s economy is vibrant despite the economic woes confronting the United States and Europe—two of the Philippines’s major export markets.

The think tank’s projection for the country’s economic growth for 2012 is consistent with that of the government’s forecast of a 5-percent to 6-percent increase.

“Continued strong domestic consumption and further national government spending, as well as improved bank-lending performance, will counter exports deceleration, dampened by weak global demand,” said a periodic report titled “The Market Call.”

The think tank said Manila Electric Co. (Meralco) electricity sales in July remained elevated particularly for the industrial sector, bolstering its expectations that gross domestic product (GDP) growth for the second half would be robust.

While there are expectations of a slowdown in economic growth for the third quarter, FMIC-UA&P’s Capital Market Research added that this would be “minor.” Economic activity may have decelerated sharply in August due to typhoons but a recovery is expected in September.

The think tank said economic growth in October to December would provide a convincing finish to the country’s economic performance for the rest of the year.

“Recovery in the fourth quarter will be robust, given election spending in the United States and the beginnings of one in the Philippines,” the report read.

Consumption spending, meanwhile, will be boosted by expectations that inflation—or the rise in the price of consumer goods—will be tame even as it sped up in August. The report said inflation would not exceed 4 percent for the rest of 2012.

“Crude oil will tend to flatten or ease slightly and food supplies should normalize by end-September based on the experience of Typhoon Ondoy in 2009, which was admittedly worse than the August monsoon rains and floods,” the think tank said.

GDP growth for the second quarter eased to 5.9 percent from the revised 6.3-percent growth posted in the first quarter due to the anemic performance of agriculture and lower demand for Philippine exports.