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By Michelle Remo, Philippine Daily Inquirer
November 25, 2008
Weighed down by high inflation, sluggish consumer spending and weak exports, the Philippine economy as measured by the gross domestic product likely grew 3.8-4.6 percent in the third quarter, the National Economic and Development Authority (NEDA) said Monday.
The government will announce official third-quarter growth data later this week.
Economic Planning Secretary Ralph Recto, director general of the NEDA, said the third quarter would likely register the slowest quarterly growth this year.
The GDP grew 4.6 percent in the second quarter and 4.7 percent in the first.
Dennis Arroyo, NEDA director for policy and planning, noted that inflation rose to a 17-year high in the third quarter and exports reeled from a slowdown in global demand.
“The third quarter was the time when inflation peaked [at 12.5 percent in August] due to high oil prices and this got to impact on sectors like fishing, transport and the damage from contracting exports,” Arroyo said.
Inflation remained at double-digit levels in September and October.
As external demand eases due to the worst financial crisis in decades and as consumers scrimp on spending, the government has cut its forecast for full-year growth to 4.1-4.8 percent from a revised 4.4-4.9 percent estimate made last month. Last year, the economy grew 7.2 percent, a 31-year high.
NEDA estimates show that the agriculture, fisheries and forestry sector likely grew 3.0-3.3 percent.
Arroyo said high fuel prices led to increases in the cost of transporting farm and fisheries products.
The surge in prices of food, fuel and other basic commodities forced some households to cut down on spending, slowing down growth, he said.
In September, the financial crisis in the United States brought down some corporate giants. It has resulted in a credit crunch that has curtailed overall growth of the world’s biggest economy, the Philippines’ biggest export market.
Arroyo also said the industry sector, which includes mining and manufacturing, probably grew 3.9-4.8 percent in the third quarter.
The services sector, which includes the still growing business process outsourcing (BPO) sub-sector, likely grew 4.1-4.9 percent.
The government’s top economic officials said the economy was still benefiting from the robust performance of the BPO sector, which they said was unlikely to be adversely affected by the financial crisis in the United States and in Europe.
Clients of most BPO firms in the Philippines are based in the United States and Europe.
The managers said the crisis in the West would force more US and European firms to cut down on cost and one way of doing that is to outsource some of their operations to the Philippines where labor is cheaper.
Recto said the economy could grow faster in the fourth quarter because oil prices have begun easing.
The easing of inflation is one reason that personal consumption would gradually grow and investment plans of businesses could be pursued, resulting in improved growth of the overall economy, Recto said. With a report from Reuters; with editing by INQUIRER.net
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