Phl tops business cycles survey in Asia

MANILA, Philippines - The Philippines topped the survey on business cycles in the Asian region on the back of strong economic recovery fueled by robust export earnings and improving business sentiment, the Organization for Economic Cooperation and Development (OECD) said.

The Asian Business Cycles Quarterly conducted by the OECD Development Centre showed that the Philippines got the highest scores in composite and leading indicators that reveal change in economic fluctuations as well as the broader picture of the overall economic activity.

OECD said the strong recovery experienced by countries in Southeast Asia is gradually losing momentum. However, the economic growth picture varies across Southeast Asian countries.

The survey showed that the Philippines got a composite indicator of 103.3 points and a diffusion index of 88 percent for leading indicators and a composite indicator of 103.6 points and diffusion index of 100 percent for coincident indicators.

Coincident indicators are selected mainly by economic relevance and statistical fitness to quarterly gross domestic product (GDP) while Leading indicators are created based on the coincident indicators and the lead time is in general five months to six months. The composite index reveals change in economic fluctuations while the diffusion index gives a broader picture of the overall economic activity.

Thailand placed second with a composite indicator of 103 points and a diffusion index of 67 percent for leading indicators and a composite indicator of 102.2 points and diffusion index of 86 percent for coincident indicators followed by Indonesia with 100.8 points and 43 percent for leading indicators and 98.6 points and 20 percent for coincident indicators. Singapore was next with 100.7 percent and 67 percent for leading indicators and 100.3 points and 67 percent for coincident indicators.

“A solid recovery is ongoing in the Philippines driven by strong exports and improving business sentiment, while activity appears to be slowing down in Malaysia and Singapore on the basis of both leading and coincident indicators. Activity growth is also showing slight signs of slowing in Indonesia. The outlook for the Thai economy is relatively stable supported by solid production activities,” OECD said.

OECD said that most indicators suggest sound recovery for the Philippines while strong business sentiment and exports strengthen the trend.

The country’s GDP grew by 7.5 percent in the first three quarters of the year from 0.7 percent in the same period last year. However, the GDP growth eased to 6.5 percent in the third quarter of the year from 8.2 percent in the second quarter and 7.8 percent in the first quarter.

Economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) upgraded the country’s projected GDP growth to five percent to six percent instead of 2.6 percent to 3.6 percent this year and to a range of seven percent to 8.0 percent next year.

The Philippines barely escaped recession last year after the GDP growth slackened to 1.1 percent from 3.8 percent in 2008 due to the full impact of the global economic meltdown.

OECD said most indicators also suggest sound recovery as well as strong business sentiment and financial data for Thailand.

However, the survey showed a mixed picture and some uncertainty in Indonesia due to sound leading indicators and weak coincident indicators while several data suggest moderation of activity due to weak trade data in Malaysia as well as gradual moderation of business activity in Singapore.

The OECD said there are signs of regained growth momentum in the Chinese economy owing to a strengthening of investment and retail sales while India’s economic recovery appears to be losing steam.

“Downside risks in the region include difficulties to manage large capital inflows and coping with inflationary pressures. There still remains uncertainty about near-term prospects for OECD countries, having an impact on Asian economic prospects,” the survey revealed.

This Asian Business Cycles Quarterly is prepared under the responsibility of the OECD Development Centre and the outlook for the region described in this quarterly is based entirely on the analysis of the Asia and Pacific Desk of the OECD Development Centre.

The Asian Business Cycles indices serve as a tool to provide comparable information on the very short term economic climate of Asian economies.