Faster economic growth seen in 2nd quarter

FASTER GROWTH Because of increased government spending, among a bevy of factors, the Bangko Sentral ng Pilipinas believes the country’s economy in the second quarter will grow faster than in the first quarter. INQUIRER file photo

The Philippine economy was estimated to have grown faster in the second quarter than the 4.9-percent recorded in the first three months due to increased government spending and better performance of the financial market.

Deputy Governor Diwa C. Guinigundo of the Bangko Sentral ng Pilipinas told reporters that the second quarter was also not beset by factors seen in the previous three-month period, notably the political turmoil in the Middle East and North Africa as well as the earthquake and tsunami in Japan.

“Also, I think because of the carryover [from 2010] of the adjustment pains of the Aquino administration, there was modest spending in the first quarter of 2011,” Guinigundo said. “In the second quarter, based on the testimony of the Department of Budget and Management at the budget hearing [in Congress], there was a catch-up spending going through the second half of the year.”

Guinigundo added that monetary authorities noticed in the second quarter that the inflow of foreign capital going into the stock market and bond market was supportive of growth.

“Remittances from overseas Filipinos continued to be resilient in the second quarter and the business process outsourcing industry also contributed to more inflows,” Guinigundo said.

BSP documents showed that remittances coursed through banks in June reached a record monthly high of $1.7 billion. This brought the cumulative remittances during the first semester to $9.6 billion, an increase of 6.7 percent over the same period last year.

“All told, I think these developments will point to a better turnout in the output performance of the economy for the second quarter,” Guinigundo said.

As early as May, market watcher Barclays Capital said it was maintaining its full-year growth forecast of 5 percent for the Philippines despite the first-quarter performance settling lower than the 5.1 percent it expected.

Even then, the investment bank said in a research note that first-quarter GDP grew 1.9 percent compared with the previous quarter. This was “above expectations of 1.6 percent and compared with 0.3 percent previously.”

On the other hand, New York-based think tank GlobalSource Partners said the Philippine economy would still grow 4.8 percent this year despite an expected “increased lethargy” in the second quarter.

GlobalSource cited data on leading economic indicators from the National Statistical Coordination Board, which hinted at slower economic activity in the second quarter.