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Gov’t keeping GDP forecast

Posted on December 06, 2011

ECONOMIC MANAGERS will not be reviewing growth forecasts for 2011 despite disappointing third-quarter results, senior officials said, holding out the hope of a boost in the final months of the year.

“I don’t think we can still revise the GDP (gross domestic product) forecast for this year. There is no more material time,” Budget Secretary and Development Budget Coordination Committee (DBCC) chairman Florencio B. Abad told BusinessWorld last week.

The interagency DBCC -- which sets the government’s macroeconomic targets -- will instead focus on monitoring growth drivers that are expected to boost fourth quarter GDP, Mr. Abad said.

Underspending, one of the main factors that has dragged down growth this year, is constantly being assessed and is expected to significantly improve in the October-December period, he added.

The economy expanded by only 3.6% as of September, threatening the government’s 5-6% target and 4.5-5.5% forecast for 2011. Analysts and international institutions have slashed their growth outlooks on the back of the disappointing results, blamed on a weak agriculture sector and a decline in construction spending.

The agriculture sector grew by only 1.8% in the third quarter. Government final consumption rose just 9.4% in the third quarter while public construction fell by 21.3%.

Mr. Abad, however, claimed that the government was already closing in on its expenditure targets. He said October saw the fourth highest monthly spending for 2011 and disbursements were less than 5% below target.

Budget Undersecretary Laura B. Pascua said their department was only waiting for documentation to be filed by key agencies such as the Public Works, Agriculture, Health and Education departments for disbursements to be made.

“We are looking forward to higher growth in the fourth quarter and sustaining this for 2012,” said Ms. Pascua, a member of the DBCC’s Executive Technical Board.

This outlook was shared by Finance Undersecretary Gil S. Beltran, another member of the DBCC technical working group.

“The government is determined to increase its spending in the fourth quarter. The forecast is an increase of 49% over the previous year. As of October, it already increased roughly 15%,” Mr. Beltran claimed.

“Agriculture was affected heavily by the typhoons in the third quarter, but hopefully, the fourth quarter will be better because it is the harvest season,” he added.

Private consumption, strong in the past three quarters, is expected to surge even more this quarter due to the holiday season, Mr. Beltran said, to be aided by a steady flow of remittances from overseas Filipino workers and an increase in personal disposable incomes.

Private investments could also receive a boost from recent meetings between President Benigno S. C. Aquino III and Vietnamese President Truong Tan Sang and South Korean President Lee Myung-bak, he said.

“For these reasons, we are still hopeful we can hit the growth forecast this year,” Mr. Beltran said.

State statisticians have said the economy needs to expand by 6.9-10.6% in the last three months of the year for the 4.5-5.5% forecast to be met. -- Diane Claire J. Jiao