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| 17-YEAR RECORD SENDS ARROYO GUSHING, BUT EXPERTS 'CAUTIOUSLY OPTIMISTIC' OF SUSTAINING IT |
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| By Rommer M. Balaba |
| Reporter |
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| IT was too good a piece of news to keep quiet about, so that President Arroyo, who was in Australia on a state visit, eagerly preempted official government announcement to boast that the Philippine economy was on a roll, having posted its strongest quarterly growth in 17 years. Economic officials on Thursday said the country’s gross domestic product (GDP) grew a hefty 6.9 percent during the first three months, far above private and government forecasts, as the local economy rode on a flurry of positive factors including low inflation, a strong peso, election spending, higher household spending and brisk export revenues. Mrs. Arroyo revealed the growth figures in an earlier interview with local media in President Arroyo said on Thursday that the strong first quarter growth of the Philippine economy signals that its 6.1-6.7 percent growth target for 2007 is attainable. In a statement, Press Secretary Ignacio Bunye quoted the President also saying that “this latest figure may signal that we are knocking at the door of 7 percent growth in the years ahead.” She said economic growth has accelerated from a growth band of 3 to 4 percent several years ago, to 5 to 6 percent during her second term because of prudent economic reform policies that she will sustain for the rest of her term. “As head of the Neda Board, the highest economic policymaking body, I will promote policies to sustain the growth surge. These include maintaining macroeconomic stability, improving the investment climate, sustaining agricultural modernization, and achieving peace and order,” she said. She said that her administration will stick with the spending program set by the Development Budget Coordinating Committee (DBCC) for a balanced budget next year, and will continue to work with Congress to pass important economic bills. The President made an indirect plea to her political rivals to set aside their differences and cooperate with the administration in alleviating poverty. The level of growth was the strongest in over 17 years when economic activities improved 7.4 percent during the fourth quarter of 1989. GDP growth is commonly used as a barometer for economic performance. “The government’s determined reforms to hike revenues, to manage expenditures effectively, to contain the deficit and to tame inflation are all cascading to benefit the economy,” Socioeconomic Planning Secretary Romulo L. Neri said in his statement. “The easing pressure on interest rates, the record levels of overseas remittances and robust export earnings have all resulted in improvements in the country’s outlook,” he added. The agriculture, fishery and forestry sector grew 4.2 percent; industry at 5.3 percent and services at 9.1 percent—the latter growth being the highest since 1983, prompting economic officials to describe it as the linchpin in the economy. Services contributed 4.4 percentage points to overall GDP growth, followed by industry with 1.7 percentage points and agriculture fishery and forestry with 0.8 percentage point. Among other production side indicators in the first quarter, manufacturing gross value added slowed to 4.6 percent from 5 percent during the same period last year; construction went down to an 8.6-percent growth from 10.7 percent; trade up to 9.1 percent from 5.3 percent; private services increased pace to 8.9 percent from 7.7 percent, and government services posted a 7.1-percent growth from 3.7 percent. “There are some indications that some manufacturing establishments are increasingly engaging in other economic activities, particularly, trading,” Romulo A. Virola, secretary-general of the National Statistical Coordination Board, said of the sector’s continued major contribution to industry despite a seeming slowdown. On the expenditure side, personal consumption expenditure picked up to 5.9 percent from 5.3 percent; government consumption to 13.1 percent from 7.6 percent; capital formation nudged up 0.6 percent versus 0.3 percent before and exports posted a 9.1-percent growth against a faster 13-percent expansion during the first quarter last year. “We are now at home with other Asian economies. . . It is time for investors to come in,” commented Dennis Arroyo, director for national planning and policy of the National Economic and Development Authority (Neda). The This higher-than-expected performance may even prompt the Development Budget Coordination Committee to review its GDP growth target for the year, now pegged between 6.2 percent and 6.7 percent, and move for a higher band, Mrs. Arroyo said. “We are now knocking at the door, so probably we will take a second look at the 7-percent growth [target],” he added. Former Neda director general Cielito F. Habito, however, was cautiously optimistic on the sustainability of such a high growth rate given some bearish conditions and sentiments. “Definitely this is welcome news since the growth defied expectations… but if we want to grow on a higher plane we must look at the challenges, the drivers in sustaining such levels of growth,” he said. Habito particularly noted the 2.5-percent contraction in imports in the first quarter, which he said may not be an optimistic signal since inward shipments largely indicate future production intentions. “This actually tells us what to expect in the future,” he commented. Habito likewise said business sentiment remains wobbly, in spite of gains, and would remain so until there is a satisfactory closure on some political issues, especially the continuing questions on Mrs. Arroyo’s legitimacy as president. --With M. Gonzalez |
http://www.businessmirror.com.ph/0601&022007/headlines01.html
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