Very Optimistic Prediction for Economy

Administration officials are optimistic that the Philippine economy will expand by 5 to 6 percent in 2012, higher than the 3.7-percent growth posted in 2011.

Socioeconomic Planning Secretary Cayetano W. Paderanga Jr. told reporters on the sidelines of the 45th Asian Development Bank governors’ annual meeting in Manila that the government’s expenditures program was getting on track and economic indicators were looking “good.”

ADB president Haruhiko Kuroda said the Philippines and its neighbors were poised to weather the effects of a mild recession in the Euro zone this year, but stressed the urgent need for member-countries to address the wide income inequality in their jurisdictions.

Kuroda said the crisis in the Euro zone was not expected to cause a significant drag on growth rates of Asian economies and on remittances that countries like the Philippines receive.

“We expect a rosier 5 to 6 percent GDP growth for 2012” not only because of “strong spending” but also because of the government’s “strong resolve on good governance,” Public Works Secretary Rogelio L. Singson said.

GDP or gross domestic product is the value of goods produced and services rendered in the country in a given period. It excludes remittances by overseas Filipino workers and earnings of Philippine firms abroad.

Singson enumerated other signs of economic improvement:

Good performance of the Philippine Stock Exchange which had seen more than 17 record closing highs since January.

A banking system that is “one of the healthiest in Southeast Asia.”

Rating upgrades from international rating agencies.

Strong foreign exchange reserves and overseas remittances.

Growing domestic consumption.

Business confidence

These strengthen business confidence in and provide “strong international support” for the Philippines, especially for its public-private partnership (PPP) program, said Paderanga and Singson.

Cosette V. Canilao, PPP Center executive director, said four projects were recently submitted to the National Economic and Development Authority for review and more projects were in the pipeline.

She said the Australian Agency for International Development had committed additional funding, bigger than the $7 million allotted last year, to support the PPPs through a grant administered by ADB.

An additional $9 million will augment the PPP Center’s Project Development and Monitoring Fund, a revolving fund to finance pre-investment studies of selected project proposals, Canilao said.

Recovery in exports

ADB country director Neeraj Jain, in a separate briefing, noted “some recovery” in exports after the 7-percent decline last year.

Jain said the Philippine government would do well to consider  diversifying products (which has been semiconductor-heavy) and markets (more around Asia rather than industrialized Western markets).

Optimism in the first quarter came from accelerated public works and signs of exports recovery, Paderanga said. He said the GDP growth of 5.5 percent in the first three months was within range.

The country’s top economist said this level of growth may be sustainable throughout the year if government spending, the main growth driver this year, continued on an accelerated pace as in the first few months.

Augusto M. Cosio, president of First Metro Asset Management Inc.,  also said the domestic economy would likely grow by 5.5 percent in the first quarter, citing similar reasons mentioned by Singson and Paderanga.

Slow government spending and sluggish global trade resulted in a 4.6-percent GDP growth in the first quarter of 2011.

The Philippine economy must grow by 7 to 8 percent annually to generate enough employment and income opportunities for a larger number of Filipinos, according to the Philippine Development Plan 2010-2016. It has consistently grown over the years, managing to expand its economy even at the height of the latest global crisis in 2009 when many countries fell into recession.

However, economic growth has failed to pull people out of poverty. Poverty incidence in the country stood at 26.5 percent as of 2009, up from 26.4 percent in 2006 and 24.4 percent in 2003.
source: http://business.inquirer.net/56955/ph-officials-optimistic-on-5-6-economic-growth