US think-tank cuts Phl growth forecast

MANILA, Philippines - New York-based-think tank Global Source Partners downgraded the Philippines’ economic growth forecasts for this year and next year after the National Economic and Development Authority (NEDA) announced disappointing growth for the third quarter of the year due to weak global trade and underspending by the Aquino administration.

In a report, Global Source said it has lowered anew the gross domestic product (GDP) growth forecast of the Philippines to 3.5 percent instead of the revised 4.3 percent this year and to 4.5 percent instead of the revised figure of 4.8 percent for next year.

“Given the gloomy global outlook and weak local drivers, fourth quarter performance will likely be no better which leads us to cut our growth forecast from 4.3 percent to 3.5 percent this year and from 4.8 percent to 4.5 percent next year, when surprises could be on the upside if private demand remains strong and if economic managers make good on their promise to accelerate spending,” the think tank stressed.

Data released by the National Statistical Coordination Board (NSCB) showed that GDP growth in the third quarter eased to 3.2 percent from 7.3 percent a year ago. This brought the GDP growth in the first nine months of the year to 3.6 percent, way below the revised 4.5 percent to 5.5 percent growth target set by the Cabinet-level Development Budget Coordination Committee (DBCC).

Global Source pointed out that the GDP growth failed to pick up in the third quarter as most analysts expected a median growth of roughly 4.1 percent while the government projected GDP growth to range between 3.8 percent and 4.8 percent.

“Slowness in the economy traced to plummeting exports as global markets further weakened and also to sustained declines in public infrastructure spending,” it added.

The think tank said there is little hope now that government’s promised catch up spending woud be met this year due to the delay in the Aquino government’s public private partnership (PPP) program.

It added that exports would also likely be further dragged down by the impact of the Euro zone’s sovereign debt crisis on the global economy and adverse shocks such as the recent flooding in Thailand that has disrupted the regional supply chain for technology and automotive products.

Furthermore, Global Source said damages from strong typhoons that lately hit the provinces of Luzon, which accounts for about a third of the country’s crop production, could also further pull down agriculture

Just last October, Global Source lowered the GDP growth target to 4.3 percent instead of 4.8 percent this year and to 4.8 percent instead of 5.5 percent next year as the global outlook became infinitely gloomier with the Euro zone in a sovereign debt crisis and the US in what could be another recessionary environment.

The company cited the string of credit rating upgrades received by the Philippines from Standard and Poor’s, Moody’s Investor Service, and Fitch Ratings as well as the increase in world competitiveness ranking by 10 slots in the World Economic Forum’s latest Global Competitiveness report.