Philippine economy may have grown more in Q2—official

MANILA, Philippines—The Philippine government has expressed optimism that the economy grew faster in the second quarter in terms of gross domestic product (GDP).

“We hope it (second quarter growth) will be higher than Q1 [first quarter],” Socioeconomic Planning Secretary Cayetano W. Paderanga Jr., also the director general of the National Economic and Development Authority, told reporters. However, the year-on-year growth posted in the second quarter of 2010 (with the same period in 2009 as base) would be hard to top, he said.

Paderanga said the economy grew by 8.4 percent in the second quarter of 2010 from the same period of 2009. This rate of growth would be very hard to beat and the government has been more focused on driving up economic momentum from early 2011, he said.

The Philippines posted 4.9 percent GDP growth in the first quarter of 2011.

“We hope that the increased investments will continue,” Paderanga said.

The government was also addressing underspending and would try to drive momentum on infrastructure projects, Paderanga added.

The bidding process for public-private partnerships should gain momentum starting in the third quarter, Paderanga said.

The big bulk of the public investment program has been in direct government implementation, he said, including farm-to-market roads and other projects, which the various government agencies and local government units have been implementing

Paderanga also maintained that the government has been keeping its “fighting target” in terms of annual growth.

The Philippines is aiming for 7 to 8 percent economic growth (measured in terms of gross domestic product) over the medium term until 2016, according to the Philippine Development Plan recently released by the National Economic and Development Authority.

Other economists have noted that the “harsh realities” of 2011, including the absence of election spending and the disruptions in many economies worldwide, could make it hard to match the growth rates posted in 2010, including the second quarter.

Gilberto M. Llanto of the Philippine Institute for Development Studies said in an earlier interview that for government to pull up the economy, the state must “proceed with perfected contracts” but send a strong signal of fighting corruption and maintaining good governance.

“It’s going to be difficult because of the tremendous amount of government spending last year plus the positive world business and investment climate. To come close to last year’s growth rates, government must spend more and consumers must demand more. Given inflationary pressures this year both are difficult to do,” said Cid Terosa, an economist with the University of Asia and the Pacific.

Benjamin Diokno, former budget secretary and an economics professor at the University of the Philippines, said the relatively smaller budget for 2011 was another one of the “harsh realities” that the government must face. The important thing to do would be to learn from the low GDP numbers in the first quarter of 2011, Diokno said.