The Philippines, which was the fastest-growing economy in Asia in the first quarter, is expected to sustain a robust rate of growth over the short term, based on the latest composite leading economic indicator (LEI).
The National Statistical Coordination Board (NSCB) on Tuesday reported that the index for the country’s key economic indicators for the third quarter of this year improved to 0.152, from the revised 0.064 of the second quarter.
The composite LEI is used to predict the performance of an entire economy for a given period through selected indicators.
With a positive index, the economy may be expected to grow, while a negative one may indicate the occurrence of an economic slowdown, if not an actual contraction.
In the case of the Philippines, there are 11 indicators composing the index: imports, tourist arrivals, money supply, electricity consumption, terms of trade index, hotel occupancy rate, number of new businesses, stock price index, consumer price index, wholesale price index, and exchange rate.
“The composite LEI continued its upward trend in the third quarter of 2013, indicating a positive outlook for the country’s economy,” NSCB said in the report.
NSCB said that, of the 11 indicators, eight were positive contributors. These were imports, tourist arrivals, money supply, electricity consumption, terms of trade index, hotel occupancy rate, number of new businesses, and stock price index.
The three remaining indicators—foreign exchange rate, wholesale price index, and consumer price index—posed potential challenges.
The peso now hovers in the 43-to-a-dollar territory after starting the year at the 40 level, aided largely by the outflow of foreign portfolio capital.
Meantime, the government is optimistic that the Philippine economy will stay on its growth trajectory.
Arsenio Balisacan, director general of the National Economic and Development Authority, has expressed confidence that the government’s official growth target of 6 to 7 percent for this year will be attained, if not exceeded.
He said the continuing increase in government spending, and observations of rising private-sector investments should help steer the Philippine economy toward the growth path even as global economic conditions remain volatile.
Last year, the Philippine economy grew by 6.8 percent from a year before—one of the fastest growth rates in Asia during the period. It exceeded the official target of 5 to 6 percent.
In the first quarter of this year, the Philippine economy grew by 7.8 percent to become the fastest-growing nation in the region, beating even China, which grew by 7.7 percent during the period.