"I’m hoping it could be 5.6 percent or more,’’ Neri told reporters at the sidelines of the Philippine Business Conference, when asked about the outlook for third-quarter growth. "Exports were strong and the government is starting to spend."
The domestic economy, as measured by the gross domestic product (GDP), expanded 5.5 percent in the second quarter from a year ago.
Exports from the Philippines, a production base for companies such as Texas Instruments Inc. and Toshiba Corp., climbed to a record in August as electronics shipments grew at more than 10 times the pace of the previous month. Rising overseas sales may help the Arroyo government meet its 2006 growth target of between 5.5 percent and 6.1 percent.
The Philippine central bank has been "tempering" fluctuations in the peso by buying dollars, said Neri, a member of the Monetary Board of the Bangko Sentral ng Pilipinas. The central bank’s attempts "to moderate" the peso’s rise may help support exports.
The peso climbed 5.7 percent in the three months ended September, making it the second-best performer of the 15 Asia-Pacific currencies tracked by Bloomberg. Gains in the currency make the country’s goods more expensive abroad compared with regional rivals.
A stronger currency may damp growth in exports, which rose 16.9 percent in the first eight months of 2006 from a year earlier, exceeding the government’s full-year target of a 10 percent increase in overseas sales.
The pace of investment in the Philippines remains "low" and is "Investments could improve growth. A vicious cycle of poor governance and policy distortions is making it costly and risky for investors to come in," Neri said.
The government has forecast net foreign direct investment to rise to $1.9 billion this year from $1.1 billion in 2005. The target is just a fifth of the $9 billion in potential investments that overseas investors saw for the Philippines, John Forbes of the American Chamber of Commerce in the Philippines said during the conference.
"Talking the talk is easy. The government has to walk the walk," Forbes said, adding that reforms have to be made to attract more foreign capital."liberalize" and open up sectors like aviation and shipping to overseas operators to attract more tourists and cut the costs of cargo, Neri said.
The Philippines should "more foreign carriers" to fly, Neri said. Each tourist creates one additional job for a nation with the second-highest unemployment in the region.
President Arroyo signed on Oct. 17 a P46.9 billion supplemental budget for the year to help bridge the gap between what was proposed this year and last year’s P906.7 billion.
The additional budget may help boost growth, Neri said.
The government is scheduled to announce third-quarter gross domestic product growth figures on Nov. 29. – Ma. Elisa Osorio