Despite slowdown, traders still upbeat on economy
Alfredo Yao. PHOTO BY LYN RILLON
MANILA, Philippines—Business groups are optimistic that the economy will still hit at least the lower range of the gross domestic product (GDP) target, but said it is crucial that the government further ramp up spending for the country to get back on a stronger growth path.
Alfredo M. Yao, president of the Philippine Chamber of Commerce and Industry said in a phone interview on Friday that they expect the increased spending activities in the last quarter of the year to help boost growth to about 6.3 percent to 6.5 percent by yearend.
According to Yao, the slower GDP growth seen in the third quarter this year may be attributed to the adverse impact of the port congestion, which was said to have hampered the operations of businesses, particularly those that depend largely on imports and exports of raw materials, equipment, end products, among others.
Dan Lachica, who heads the Semiconductor and Electronics Industries in the Philippines Inc., agreed that the “port congestion definitely has a significant negative effect on GDP.”
“I was saying this as early January this year. With a strong yearend finish and continued efforts to decongest the ports, there is still a chance to hit the lower end of GDP estimates,” Lachica explained, adding that the for the local economy to hit its growth targets, it would be crucial that there will be no further truck bans and no power disruptions.
Management Association of the Philippines president Gregorio Santillan Navarro, for his part, said in a text message that while industry and services sectors continued to grow in the third quarter, the agriculture sector and government spending have pulled down the growth rate.
“These then are the areas that need focus. Industry and consumption could have been better but I suppose the port congestion had a dampening impact in third quarter performance. The speedy enactment of the 2015 budget and approval of the supplemental budget could help get us back on the 7-7.5 percent growth path, but we need at least an 8.2-percent fourth-quarter performance to catch up with the target and that will be quite a challenge,” Navarro explained.
Peter V. Perfecto, executive director of the Makati Business Club, separately noted that, “this downward trend must be addressed aggressively by government with support from private sector…”
“Transport infrastructure which includes the port congestion issue must be top on the list for action. It may be too late to make a difference for the yearend rates but further delay in addressing ports congestion for example may extend the downward trend into 2015,” Perfecto warned.
Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. , similarly noted that increased government spending may be the key to boost GDP to over 6 percent by yearend, despite the slow pace of growth seen in the third quarter.
But for John D. Forbes, senior adviser at the American Chamber of Commerce of the Philippines, the latest growth figure was “unexpected and disappointing.”
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