GDP growth target for ’11 ‘out of reach,’ DBS says
The Development Bank of Singapore expects the Philippine economy to grow this year by only 3.6 percent, after the government reported that the increase in gross domestic product in the third quarter was worse than expected.
In its latest research note, DBS said the 3.2-percent growth in the July-September quarter brought GDP expansion to 3.6 percent for the nine months to September.
“The disappointing figure means that even the lower band of the government’s 4.5 percent to 5.5 percent revised target range is probably out of reach,” the Singapore-based group said.
DBS noted that the single largest drag on growth was the poor export performance in the third quarter.
The group said the third-quarter decline of 13.1 percent year on year in exports was comparable to the performance in 2009 when the country felt the brunt of the global financial crisis.
Also, DBS said the public-private-partnership (PPP) projects that were supposed to be kick-started in this second semester were delayed and now look to be more of a story for 2012.
“Private consumption remains the sole bright spot in the economy, with per-capita expenditure growing 7.1 percent, up from 5.4 percent in the preceding quarter,” the group said.
“Going forward, the outlook for the economy is not rosy,” it added. “Although private consumption makes up close to 70 percent of GDP, the economy is still vulnerable to swings in external demand.”
“With no end in sight” for the downtrend in electronics amid lingering uncertainties in the global economy, DBS said Philippine exports will likely prove to be a drag in the coming quarters.
Moreover, DBS expects agricultural output, which was affected by bad weather in the third quarter, to also perform below par in the fourth quarter—especially following typhoon damage in late September.
“Domestic demand will be the key toward cushioning the blow from anemic exports,” DBS said. “A lot will depend on the implementation of the PPP programs and increased government spending.”
