ANALYSTS EXPECT FARM OUTPUT, REMITTANCES TO BOOST Q4 GDP
MANILA, January 27, 2006 (MALAYA) The Philippine economy probably grew by 5.0 percent in the fourth quarter from a year before due to better-than-expected farm output and healthy consumer spending supported by remittances from overseas workers, a Reuters poll showed.
The poll, based on the median forecast from 10 economists, also suggested that gross domestic product grew 4.8 percent in 2005, at the bottom end of the government’s latest estimate of 4.8 percent to 5.1 percent growth.
The economy probably grew a seasonally adjusted 3.2 percent in the fourth quarter from the previous quarter, according to the survey, after growth of 0.6 percent in the third quarter and 1.4 percent in the second.
"Growth was mainly due to the agricultural recovery in the fourth quarter and also remittances," said Jose Mario Cuyegkeng, an economist at ING Bank in Manila.
"There was also some amount of government spending. For the fourth quarter, spending net of interest payments was 7.5 percent higher from a year earlier, versus a 2 percent drop in the third quarter," he said.
The government will announce fourth-quarter GDP data on Monday.
The farm sector, which accounts for a fifth of GDP, expanded 3.3 percent in the fourth quarter from a year earlier, the fastest growth in five quarters.
But the average growth of 2.24 percent in the agricultural sector in 2005 fell short of a government goal of 3.0 percent.
Consumption, which accounts for about 70 percent of GDP, has been fuelled by the money sent home by more than eight million Filipinos working overseas — equivalent to about a tenth of the country’s population.
Such remittances were estimated to have reached $10.7 billion in 2005, up 26 percent from $8.5 billion in 2004.
But total remittances could be 15 to 20 percent higher than the official number if informal transfers, such as money sent home through relatives and friends, is included, the Philippine central bank has said.
The economists in the poll said that for 2005 as a whole, weak exports and droughts that hurt agricultural output for most of the year would mean that economic growth probably fall below the government’s official target of 5.3 percent.
Last month, officials from the government’s planning agency said economic growth was likely to have slowed to 5.1 percent at best in 2005 from a revised 6.0 percent in 2004.
In 2006, the economy is expected to expand 4.9 percent, the poll showed, with consumption expected to suffer in the first half from a two-percentage-point rise in the national sales tax rate to 12 percent, effective Feb. 1.
The government has forecast GDP growth of between 5.7 percent and 6.3 percent this year. - Reuters
Chief News Editor: Sol Jose Vanzi
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