ECONOMIC GROWTH likely improved in the third quarter from April-June, a Cabinet official said, citing “still robust” private investments, a service sector expansion and higher government spending.
“Our expectation is that the GDP (gross domestic product) in the third quarter will be better than the second quarter,” Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr. told reporters yesterday after a budget hearing at the Senate.
Second-quarter growth was 3.4%. Official third quarter data is scheduled to be released on Nov. 28.
Mr. Paderanga’s statements came as another Cabinet secretary, the Budget department’s Florencio B. Abad, said state spending remained below program as of October. His office, however, also claimed that P43.396 billion out of a P72.11-billion stimulus package approved last month has been released.
Mr. Abad declined to elaborate, but said projects were being executed and that the Public Works department — one of the agencies with the biggest budgets this year — had already “dramatically increased its spending.”
State underspending and weak exports were the main factors behind the first semester’s weak economic growth.
Mr. Paderanga claimed that private investments were “still robust” while the services sector also continued to expand, driven by the business process outsourcing industry. Private investments grew by 12.8% in the second quarter, while the services sector expanded by 5%.
“We have also stabilized government expenditures, and we’re catching up on public spending on infrastructure,” he added.
Public construction posted a sharp 51.2% fall in the second quarter.
Mr. Paderanga, however, also noted that the July to September period saw a string of typhoons hitting the country, dampening growth in agriculture that is usually a strong contributor to GDP. Agriculture grew by 1.59% in the third quarter, the government yesterday reported.
A slowdown in the United States, Europe and Japan — the country’s top three export markets — could also affect the economy’s expansion, he said. Exports declined by 0.3% in the second quarter.
The government recently cut its 2011 growth target to 5-6% from 7-8%. It also set a forecast of 4.5-5.5% amid fresh fears of a looming global economic crisis.
Economists, meanwhile, had mixed expectations regarding the third quarter.
The University of Asia and the Pacific’s Victor A. Abola agreed with Mr. Paderanga, saying the economy could have grown by 4.5%, driven by investments and services.
Colleague Peter Lee U, on the other hand, said: “I am not confident we can surpass the second quarter growth, especially with the decline in exports.”
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By: Diane Claire J. Jiao
Source: Business World, Nov. 16, 2011
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