RP ECONOMY SHRINKS FOR 1ST TIME SINCE 2000Manila, May 30, 2003 -- The Philippine economy shrank in the first three months of the year, its first contraction since late 2000, mirroring a regional slowdown as dry weather hit agriculture and a sluggish global economy hurt exports. The 0.5 percent contraction in gross domestic product reported by the government on Thursday was in line with most expectations and compared with downwardly revised 2.4 percent quarterly growth in the October-to-December period. The data will fuel concern that the government will be unable to raise sufficient taxes to plug a gaping budget deficit which the government targets at 4.6 percent of GDP this year. The Philippine peso fell sharply at the open against the U.S. dollar, hitting 53.30 per dollar in early trades, a two month low. First-quarter GDP was up 4.5 percent on a year earlier, slower than the 5.8 percent growth seen in the year to the final quarter of 2002 but higher than the growth of 3.8 percent in January to March 2002. Another contraction in GDP in the May-to-June period would push the Philippines into recession for the first time since the Asian financial crisis of 1997-1998. "For the second quarter, all the signs are there for growth to moderate due to the outbreak of SARS and the state of external demand," said Song Seng Wun, regional economist at GK Goh Securities in Singapore.
Reported by: Sol Jose Vanzi
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