Gov't says 2011 GDP growth likely at 3.6-4%
Services, personal consumption, govt spending fueled Q4 growth
MANILA, Philippines - The Philippine economy likely expanded 3.6% to 4% in 2011, missing the government target, as weak state spending in the first half and sluggish exports dampened growth and strengthened the case for further policy easing.
The economy may have grown between 3.2% to 5% in the fourth quarter from a year ago, faster than the 3.2% growth reported in the third quarter, Ruperto Majuca, assistant director general of the economic planning agency said on Wednesday.
"We expect that GDP growth for the fourth quarter will be higher than that of the last quarter. However, it might not exceed 5%," Majuca said in a mobile text message to reporters.
He added the strength of the services sector and personal spending, fuelled by an average $1.6 billion in remittances sent home monthly by Filipinos overseas, supported growth in the fourth quarter. Aggressive state spending in the final three months of the year would also help lift growth, he said.
Official GDP data will be released on Monday. The government had set a growth target of 4.5% to 5.5% this year compared with 7.6% expansion in 2010.
The country's slower growth last year mirrors that of its Asian neighbours, and probably triggered the Bangko Sentral ng Pilipinas' (BSP) policy rate cut last week, its first since July 2009. BSP officials had said the fourth quarter growth data would be key to revisiting the rates policy.
Weak regional growth
Vietnam expanded 5.89% in 2011, lower against 2010, while China posted its slowest growth in 2-1/2 years in the December quarter.
Slower demand for the country's main exports of semiconductors and electronic parts have hurt imports, with the trade balance for November posting the widest deficit in at least seven years of $1.64 billion.
Imports grew 0.6% in November, the weakest increase in more than two years. The Philippines imports electronic parts and assembles them for export later to countries such as Japan, China, and the United States.
"Lead indicators also signal that the electronics sector, semiconductor sales in particular, will remain pressured in the coming months, not helped the least by fresh headwinds by way of recent Thai floods along with waning demand from the European markets," said Radhika Rao, economist at Forecast PTE in Singapore.
"Another source of worry is the sharp deterioration in the trade balance which will eat into the current account position for the year despite strong remittance inflows. This could hurt the peso by extension and weigh on the growth outlook," Rao said.
Manila has targeted growth of 5% to 6% in 2012, but doubts emerged on the country's growth prospects this year with signs of a prolonged debt crisis in the euro zone and continued weakness in the U.S. economy.