Tuesday, 23 June 2009

NEDA insists Philippine 2nd quarter will be better

Reuters, Justin S. Gatuslao and Paolo Luis G. Montecillo
Full article at http://www.bworldonline.com/BW062309/content.php?id=002

THE PHILIPPINES will avoid a recession with second-quarter growth expected to outperform the first three months of the year following accelerated state spending, government officials yesterday said.

The claim — questioned by economists and former Cabinet officials — came as the World Bank said the Philippines would fall into a recession this year.

"We expect things to be better than the first quarter," said Rolando G. Tungpalan, deputy director general of the National Economic and Development Authority (NEDA).

Mr. Tungpalan said "things are looking better now", primarily due to infrastructure spending under the P330-billion Economic Resiliency Plan (ERP), 60% of which, he said, would be spent in the first semester.

Consumer spending, he added, has already started to improve because of the recent school opening. Another factor that will contribute to better growth is the continued inflow of overseas Filipino worker remittances.

"I cannot imagine a second quarter worse than the first quarter," Mr. Tungpalan said. "Surely there is no recession. Resiliency will win over recession."

Mr. Tungpalan echoed comments by his boss, Socioeconomic Planning Secretary Ralph G. Recto, who last month said the economy was certain to grow this quarter, buoyed by spending.

The government has cut its growth target to 0.8-1.8% this year from 3.1-4.1% following a poor first quarter.

The economy shrank 2.3% in the first three months from the previous quarter, the worst in two decades, bringing annual first-quarter growth to 0.4%.

The International Monetary Fund expects the economy to shrink by 1% this year and the World Bank yesterday announced that it expected the Philippines to contract by 0.5%.

The new World Bank forecast was rejected by a colleague of Mr. Tungpalan, NEDA policy planning director Dennis A. Arroyo, who said "We still believe we’ll still be growing this year."

"Because of the delay in the budget, the first quarter GDP (gross domestic product) result, of course, was low," he said.

"The first quarter did not benefit from the ERP spending, so growth was slow for the period ... but now we have the money to spend."

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