HABITO SEES ECONOMY GROWING AT SLOWER RATE
MANILA, August 12, 2005 (STAR) By Marianne V. Go - The economy is expected to grow by 4.5 percent to 5.3 percent this year, about a percentage point lower than the governmentís forecast of 5.3 percent to 6.3 percent due to the lingering political issues hounding the Arroyo administration, Former Economic Planning Secretary Cielito Habito said yesterday.
Habito, who is currently the director of Ateneoís Center for Economic Research, said that based on Ateneoís Macroeconomic Forecasting Model, the nationwide inflation rate may range from eight to nine percent this year based on a $65 per barrel crude oil price.
"Aside from the political uncertainty, there are real cost pressures on manufacturers," Habito said.
Since last year, Habito pointed out, the price of steel and copper have doubled while oil prices continue to soar mainly due to continued strong demand led by China.
The job outlook, Habito said, remains bleak and unemployment is increasing.
Whatever economic growth there has been, Habito said, has not resulted in job creation or most of the jobs created are part-time or low quality jobs.
An indication of the lack of jobs is the increase in underemployment figure to 26 percent, Habito said.
The economy, Habito noted, is still basically consumption driven. According to Habito, investments were also down as evidenced by recent figures of the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA).
The growth in portfolio investments, Habito warned, should not be depended on since such investments are volatile and may leave at any moment.
The outlook next year, Habito projects, will basically be the same as this year.
Oil prices hit new record high of $65.23 per barrel The Philippine Star 08/12/2005
SINGAPORE (AP) Ė Oil prices rose to a new high of $65.23 a barrel in Asian trading yesterday after the US midweek inventories report showed a decline in gasoline stocks and on concerns that a string of refinery shutdowns in the US will make it difficult for gasoline supplies to meet peak summer demand.
Prices were also lifted by heightened tensions between Iran, OPECís No. 2 producer, and Western countries, as the Islamic republic resumed full operations at its uranium conversion plant. It warned yesterday that threats of UN sanctions against Tehran would lead to a "path of confrontation."
Mid-afternoon in Singapore, light, sweet crude rose 33 cents to $65.23 a barrel in Asian electronic trading on the New York Mercantile Exchange. On Wednesday, the contract rose $1.83 to close at $64.90 a barrel, after climbing to an intraday $65 high.
Gasoline was trading at a high of $1.9136, up by 1.73 cents, while heating oil rose 1.25 cent to $1.8513.
Crude futures have risen 14 percent in the last three weeks, driven by an array of concerns about supply disruptions: US and Venezuelan refinery outages, the Atlantic hurricane seasonís impact on production in the Gulf of Mexico, the death of Saudi Arabiaís King Fahd as well as Iran.
"Hedge funds continue to roll over their large energy investments from September to October, and many are predicting prices of $65-$70 per barrel as they take more length," said Energyintel analyst George Orwel in a research note.
While oil prices are about 46 percent higher than a year ago, they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.
Analysts said the market is discounting fundamentals that show global oil supply is adequate, and demand growth is slower thanexpected. Instead, short-term worries have dominated the market, as a flurry of speculative buyers entered the market betting that demand will outstrip supply.
"In such a market environment where the price is so reactive to short-term events, itís hard for participants to want to sell," said energy analyst Victor Shum at Texas-headquartered Purvin & Gertz in Singapore.
"This build up in momentum has attracted a lot of investment money into the market," Shum said. "The focus has been on declining gasoline stocks especially as this is the US summer driving season. The fundamental supply-demand situation has been secondary."
The weekly US petroleum supply snapshot on Wednesday showed a drop in gasoline stocks by 2.1 million barrels to 203.1 million barrels, likely the result of at least seven US refinery outages in less than three weeks.
It was sixth decline in a row for gasoline inventories, and that fueled concern among some traders.
Energy markets have been extremely jumpy about a spate of refinery outages in recent weeks. Some traders said the recent US refinery troubles - the latest reported at BP PLCís plant in Texas City on Wednesday - is evidence the industry and its aging infrastructure are having difficulty maintaining output at high levels.
But analysts and industry officials said refinery snags are not out of the ordinary for this time of year, when plants run hard to meet peak gasoline demand.
On Wednesday, the US Energy Information Administration also reported a rise in crude inventories but it seemed to be disregarded by market players, because the stocks build occurred mostly in the US West Coast, analysts said.
Meanwhile, the International Atomic Energy Agency, the UNís nuclear watchdog, will meet Thursday to discuss a resolution to urge Iran to stop nuclear processing, which Europe and the United States fear will lead to weapons of mass destruction.
Iranís envoy to the agency warned that referring the matter to the UN Security Council Ė which could result in sanctions against them Ė would lead to a "path of confrontation." Tehran says its nuclear program is peaceful, aiming only to produce electricity.
Reported by: Sol Jose Vanzi
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