MANILA BULLETIN - September 1, 2009

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NEDA sees sustained GDP growth after 2009

The National Economic and Development Authority (NEDA) is confident of a sustained economic growth beyond 2009 after the country’s gross domestic product posted a modest growth of 1.5 percent in the first half.

NEDA acting director general Augusto B. Santos said that the Philippines continues to be economically resilient and remains as one of the few economies enjoying positive GDP growth rates.

Santos noted that the Philippines has avoided a recession when its seasonally adjusted second quarter GDP grew by 2.4 percent from a revised -2.1 quarter-on-quarter GDP growth for the first quarter of 2009.

“Government and private sector hiring programs, flexible working arrangements, and the frontloading of infrastructure projects under the government’s Economic Resiliency Plan (ERP), all helped cushion the economy’s growth and employment from the global recession,” Santos said.

“The country is on track in achieving the high-end of the government annual growth target of 0.8-1.8 percent.”

With the coming election spending and the Filipino penchant to consume during the Christmas season, Santos said a 1.8 annual GDP growth is possible.

National Planning and Policy Staff Director Dennis Arroyo said that it is “possible to breach the high-end of the government target given the signs of an economic turnaround such as the growth in Philippine exports, the rise of the stock market, and the slowdown in inflation.”

Arroyo expects that the growth in the third quarter of 2009 would be better than the second quarter.

Consumer spending in the coming months is also seen to rise due to continued inflow of remittances as Overseas Filipino Workers (OFWs) return to work abroad as well as increases in retail trade beginning in December, earnings in tourism, and spending from the Business Process Outsourcing (BPO) industry workers.

The improvement in the second quarter personal consumption to 2.2 percent growth rate compared to the last quarter “seems to indicate the easing of the fear” in consumers, Arroyo said.

However, the risks such as the speculation in oil due to the “greenshoots” phenomenon and a probable drought towards the end of 2009 might slow down economic growth. To take advantage of the global economic rebound in 2010, the government has designed the REAP (Reloading for Economic Acceleration Plan).