3rd quarter economic growth seen at 3.8% Doris Dumlao Philippine Daily Inquirer
November 08, 2009
THE PHILIPPINE economy will likely grow year-on-year by a better-than-expected 3.8 percent in the fourth quarter even in the aftermath of the great floods that devastated Metro Manila and some parts of Luzon, according to a joint research by First Metro Investment Corp. and the University of Asia and the Pacific.
In their “The Market Call” publication for October, the joint FMIC-UA&P research said despite the catastrophic rainfall and floods in end-September, the third quarter growth would likely be much better than the first two quarters of the year.
“We have scaled down, nonetheless, our full-year GDP [gross domestic product] growth forecast to 2.1 percent, as the positive spending may not be sufficient to completely offset the output losses in agriculture and productive capacity,” the research said. The research said the main impact of the flooding was on agricultural output, especially rice, and slightly on manufacturing in portions of Metro Manila and Northern Luzon. However, it said this would be partly offset by the spending on new appliances, furniture and repairs of houses, buildings and infrastructures.
FMIC-UA&P believed this would shave fourth-quarter GDP estimates by 0.5 percent but still rise by 3.8 percent, which would still enable it to beat the high-end of government projections.
Growth in total electricity sales, used by FMIC-UA&P as proxy for economic activity, jumped from 0.3 percent in the second quarter to 4.3 percent (year-on-year) in the third quarter.
“It is safe to conclude that economic activity in the country picked up in the third quarter with residential electricity sales up by 6.5 percent and commercial sales up by 4.3 percent. This is also the quarter in which the industrial sector turned positive, growing at 1.7 percent for the third quarter,” the research said.
“Although the country may have suffered from two devastating typhoons toward the end of September, the third quarter has been the best quarter for the economy so far this year,” it added.
The Philippines posted a better-than-expected year-on-year growth in gross domestic product of 1.5 percent in the second quarter on the back of robust remittances and the government’s fiscal pump-priming, wiping out fears of an economic recession this year. This was much better than the revised first-quarter GDP growth of 0.6 percent.
On a monthly basis, the research said August was generally better than September, noting that electricity sales growth for September slowed down from 5.5 to 3.7 percent due to the decline in residential and commercial sales. Still, the industrial sector continued to show signs of recovery as its power consumption growth accelerated to 3.3 from 1.1 percent in August, the research said.
