‘Above 7% full-year GDP growth still attainable’

'Above 7% full-year GDP growth still attainable'

TUESDAY, 23 NOVEMBER 2010 19:44     CAI U. ORDINARIO / REPORTER  
EVEN with expectations that the country's fourth-quarter economic growth will be slower, the National Economic and Development Authority (Neda) believes that the economy can still post a growth of above 7 percent in 2010.

The Neda forecasts that the economy could have grown 6.7 percent to 7.7 percent in the third quarter. This will likely result in a gross domestic product (GDP) growth that is above the government's 5-percent to 6-percent target for the full year.

If the Neda is right in its projection, Neda Deputy Director General for Planning Margarita Songco said the economy will only need to grow around 6.7 to 6.8 percent in the last quarter of the year to attain a growth of about or above a 7-percent rate this year.

"The average is already 7.9 in the first semester, isn't it? So our forecast was correct, which is 6.7 percent to 7.7 [percent], it will be above 7 percent for the whole year. We still have to wait for the fourth quarter," Songco said, partly in Filipino, in a briefing with reporters on Tuesday.

Songco said the government is also not bent on changing its macroeconomic targets for 2011, given the still satisfactory performance of the economy.

The Neda official said given the current track of economic growth, the 7-percent to 8-percent GDP target for 2011 will still be maintained by the government. However, she said for budgetary purposes, the forecast used by the government was a more conservative 4 percent to 5 percent.

The conservative forecast takes into consideration the same factors that could also lead to a slower fourth-quarter growth. These include expectations of export-earnings slowdown due to the strong peso, the current trend of economic growth in the region and base effects.

"[For 2011, 7 percent to 8 percent] is the target. Projection is different, compared with the target. For budgetary purposes, I think [its at] 4 to 5 [percent]. That's what we used for the budget. But [the] target is 7 to 8 percent," Songco explained.

"Hopefully the performance of the industry would improve, with all the different measures that we're undertaking, like improving competitiveness. I think the Department of Trade and Industry has also initiated specific measures to improve competitiveness, the ease of doing business, there are initiatives being undertaken to make it simpler, lesser hassle," she said.

The Neda's projections for the third quarter was based on expectations that the growth of the industry and services sectors were the main drivers of economic growth in the July-to-September period.

She said the main drag came from the agriculture sector, which posted a contraction of 2.8 percent in the third quarter and 2.62 percent in the January-to-September period due to the prolonged El Niño phenomenon.

Songco said the main growth driver for industry in the third quarter was due to the strong external and domestic demand that fueled manufacturing, construction, and the mining and quarrying subsectors.

For services, Songco said the sector benefited from the low-inflation environment, which propped up the trade, private services, transportation, communication and storage subsectors.

"The continued global economic recovery, low-inflation environment, and improvement in consumer and business confidence were seen to have influenced the country's economic growth. GDP growth, however, could have been limited by the negative impact of the prolonged El Niño phenomenon on the agriculture sector," Songco said.

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