Growth forecast backed

Business World

Posted at Jan 31 2011 08:09 AM | Updated as of Feb 03 2011 01:54 AM

MANILA, Philippines - Economists expect growth in the fourth quarter of last year to have fallen within the 6.2-7.2% range forecast by the government, keeping the full-year result -- as expected -- above the official 2010 goal of 5-6%.

Analysts polled by BusinessWorld all offered forecasts within the range, contrasting with outlooks released last week that said gross domestic product (GDP) growth could have slipped below 6%.

Fourth-quarter and full-year GDP data will be announced today. Last week, Socioeconomic and Planning Secretary Cayetano W. Paderanga, Jr. said 6.2-7.2% October-December growth would help keep the 2010 result at 7-7.4%.

"That’s reasonable," Peter Lee U of the University of Asia & the Pacific (UA&P) said.

Mr. U, who adopted Mr. Paderanga’s forecast, said consumption fueled by overseas Filipino workers’ remittances supported the economy during the final months of 2010.

Fellow economists Enrico L. Basilio -- also from the UA&P -- and Fernando T. Aldaba from the Ateneo de Manila also took up the Cabinet official’s 6.2-7.2% estimate.

Strong consumption during the Christmas holidays was likewise cited by Mr. Aldaba, while Mr. Basilio said business process outsourcing and tourism were the growth drivers for the period.

"For sure, remittances went up from November to December. I think it’s the major driver," Mr. Aldaba said.

Another UA&P economist, Emil T. Antonio, forecast 7% growth for the fourth quarter, pointing to investment and export gains arising from favorable perceptions of the new Aquino government.

"I think investment would be a big factor because of the high trust ratings of the new administration," Mr. Antonio said.

A narrower outlook of 6.5-7% was offered by fellow UA&P economist Cid L. Terosa, who said: "Consumption, exports and remittances were the three drivers during the fourth quarter".

A Reuters poll of 12 analysts released last Thursday, meanwhile, resulted in a median growth forecast of 5.9% for the fourth quarter, with a 7% result expected for 2010.

In a regional outlook issued late on Friday, Citi economist Jun Trinidad said the fourth quarter outlook for the Philippines had been revised to 5.8% from 5.1%, which would peg full-year growth at 7%.

Strong imports seen as tied to inventory restocking and investment activity were the primary reason for the upward change, Mr. Trinidad said.

The Philippine economy grew by surprisingly strong 7.8% in the first quarter, well above the government’s full-year target at that time of 2.6-3.6%. The result prompted a revision of the 2010 goal to the current 5-6%.

Economic managers cautioned of a second quarter slowdown due to a dry spell but the result was a slightly stronger 7.9%. Growth finally started easing -- attributed to continued global uncertainty -- in the third quarter, to 6.5%, but the 7.5% average for the three quarters remains well above the official target.
The government has a 7-8% GDP growth goal for 2011 -- bucking analysts’ more moderate outlooks -- but officials have indicated that this could be reviewed.

They have also pointed out that this year’s budget assumed 5% growth, with the higher target to be achievd via public-private partnership projects. -- with a report from Reuters