Philippine Officials Seek New Boost as First-Quarter Growth Disappoints – Real Time Economics

Workers lay concrete on a street as visitors stands congested in Manila.
Bloomberg

Philippine authorities are taking a look at methods to rev up reconstruction and rehabilitation from final yr’s pure disasters after knowledge Thursday confirmed the economy grew at its weakest pace since late 2011 in the first quarter.

The Philippine financial system expanded H.S% on-yr within the first quarter, properly under the S.A% anticipated and its slowest tempo in 9 quarters. Growth was properly under the federal government’s S.H%-S.H% goal for 2014, although it was nonetheless among the many quickest in Asia up to now this yr.

The miss wasn’t solely surprising, given the devastation wrought by natural disasters late last year — notably November’s Typhoon Haiyan, which brought about an estimated $thirteen billion in damages and losses to the archipelago’s $315 billion financial system.

Economic Planning Secretary Arsenio Balisacan stated he and different financial managers would meet later Thursday with President Benigno Aquino III to determine tasks that may be accelerated to cowl the slack in agriculture, tourism and even personal development, which has been harm by lending restrictions imposed late final yr to go off a possible actual-property bubble.

The governor of the nation’s central financial institution, Amando Tetangco Jr., stated financial authorities are prepared to regulate measures it adopted to restrict banks’ publicity to the actual-property sector.

Government officers additionally will meet with native officers within the metropolis of Cebu to finalize reconstruction and restoration plans greater than six months after a S.P magnitude earthquake in October, after which Typhoon Haiyan a month later, devastated the central Philippines.

“It is necessary to get the expansion trajectory, together with the reform agenda, again on monitor so the optimism within the home financial system is sustained,” Mr. Balisacan stated.

Economists nonetheless see vibrant spots in an financial system that was Asia’s greatest performer final yr, when it grew S.P%. Remittances from Filipinos working abroad and earnings from the enterprise-course of outsourcing business proceed to maintain personal consumption, whereas resurgent global demand is boosting exports. The providers sector is also displaying resilience — rising by greater than S% on-yr within the first quarter — whereas funding continues to extend.

Rahul Bajoria, an economist at Barclays, stated he’s assured the Philippine financial system will attain his forecast of S.H% progress this yr regardless of the primary-quarter miss, current tightening steps from the central financial institution and attainable curiosity-price will increase later this yr.

In a analysis notice Thursday, Capital Economics stated an in depth take a look at the GDP knowledge reveals encouraging numbers.

“The outlook stays upbeat. We anticipate a rebound over the approaching quarters, which might make sure the Philippines stays one of many area’s strongest performers,” stated Daniel Martin, an Asia economist at Capital Economics. “Our S.H% progress forecast for this yr continues to be inside attain, even whether it is now wanting a contact on the excessive aspect.”

For some, although, Thursday’s launch might immediate a rethink.

Michael Wan, an economist with Credit Suisse, see draw back dangers to his forecast of seven% progress this yr, particularly with the current rise in Japan’s worth-added tax – which might harm demand for Philippine exports — and limits on vans in Manila which have pressured some factories to chop manufacturing.

“If we’re proper about these two drivers, manufacturing and export actions will probably stay subdued in 2Q, and maybe past,” Mr. Wan stated.

29 May 2014

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