THE increase in commodity prices and slowdown in government spending are expected to cut the country’s full-year economic growth to 6.2 percent to 6.4 percent this year, according to economists from the Ateneo de Manila University (AdMU).
In the Eagle Watch briefing on Friday, AdMU economists said they forecast that growth in the second quarter could reach 6.1 percent to 6.3 percent; third quarter 6.3 percent to 6.5 percent; and fourth quarter 6.6 percent to 6.8 percent.
With the first quarter registering a growth of only 5.7 percent, and the succeeding quarters expected to be plagued by high inflation and slow pace of government spending, growth will fall below the government targets for the year, they said.
“We think it will still be investments that will be the key driver, and also we expect manufacturing to begin to pick up. Initially, there were these problems on [Supertyphoon] Yolanda and all of these political turmoil and [other] problems. [But] in time, we will be able to solve [these] and get back on [a higher growth] path,” former Chairman of the Economics Department and Eagle Watch Senior Fellow Leonardo A. Lanzona Jr. said during the relaunch of the Eagle Watch briefing.
Lanzona said this higher growth path may be seen in the projected average growth in the next two years. The AdMU economists believe that growth could reach the low end of the government’s target, at 7 percent next year and 7.5 percent in 2016.
Former Socioeconomic Planning Secretary Cielito F. Habito, however, said the only way for the country’s average growth to hit around 7 percent this year is if the government significantly increases its spending.
This spending mainly includes those that will be made to finance the reconstruction efforts in Yolanda-affected areas in Central Philippines.
“My fearless forecast for 2014, although I’m quickly losing hope that I might win my bet, some of you may know that my bet with [former finance undersecretary] Romy Bernardo, who said—like my colleagues—is 6.2 percent or so. I said ‘no, we can still maintain 7 percent provided that the government gets its act together.’ Number one, reconstruction in Yolanda areas, two, precisely, getting the Bangsamoro economy to be attractive as it should be, given the peace agreement,” Habito said.
Habito also said other factors that could spur economic growth this year is the expansion of the manufacturing sector.
Lanzona said the manufacturing sector has posted a remarkable performance in the past few years and has boosted the growth of the Industry sector.
“[Compared to other] industries, it is really manufacturing that seems to be on a roll. If you look at the long-term perspective, for the first time in manufacturing, it outpaced services, as far as growth is concerned,” Lanzona said.
In 2013 the Industry sector outpaced the growth of the Services sector with 9.5 percent. The Services sector only posted a growth of 7.1 percent last year.
Written by: Cai U. Ordinario