SECOND-QUARTER economic growth could have come in below 5% because of the country’s weak export performance, a Cabinet official yesterday said.
“BSP (Bangko Sentral ng Pilipinas) thinks we will hit 5%. I think we will be below 5%,” Trade Secretary Gregory L. Domingo told legislators at a House of Representatives budget hearing.
Gross domestic product growth eased to 4.9% in the first quarter from 8.4% a year earlier, blamed on government underspending and weak exports. Second quarter data is scheduled to be released next week.
“We expect weak second quarter GDP figures because of weak exports … even the electronics industry has downgraded their target to -5%, which is about 10 [percentage points] below their original target,” Mr. Domingo added, referring to the Semiconductors and Electronics Industries of the Philippines, Inc.’s revised growth target, originally between 8-12%.
The Trade chief, nevertheless, reiterated his department’s commitment to this year’s 10% export growth target given expectations that the electronics sector would post significant improvements in the second semester.
Exports were down by 10.2% to $4.09 billion in June from $4.56 billion a year earlier, pulled down by electronics that accounted for 54% of total earnings for the month.
University of Asia and the Pacific economist Cid L. Terosa concurred with the GDP view, saying the odds of 5% or more growth “are small.”
“[E]xport performance dipped drastically due primarily to events in Japan … [this] decline reduced the possibility of hitting 5% growth or more. Also, government spending was still restrained,” he added.
The Trade department, however, is optimistic of a second half improvement, noting that Japan is expected to recover from March’s deadly earthquake and tsunami.
The strong peso was also discounted, with Mr. Domingo saying: “We will not revise our export growth target just because of foreign exchange figures.”
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By: E. J. Diaz
Source: Business World, Aug. 22, 2011
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