Port congestion, El Nino threaten economic growth: analysts

MANILA, Philippines (Xinhua) - Port congestion in the country's capital region of Metro Manila and the threat of El Nino could make it difficult for the Philippines to hit its economic growth target for 2014, analysts said today.

Analysts made the statement after the Philippine Statistics Authority (PSA) released the gross domestic product (GDP) data which showed that GDP grew 6.4 percent in the second quarter.

"Agriculture grew at a higher than average rate. That is not sustainable with El Nino. Strong manufacturing growth is also not sustainable due to the power shortage. Infrastructure spending will be constrained by government's ability to move projects," University of the Philippines economist Benjamin Diokno said.

"The likelihood (of hitting) the official growth target of 6.5 to 7.5 percent for 2014 is getting dimmer and dimmer every day," Diokno added.

University of Asia and the Pacific School of Economics Vice Dean Cid Terosa said that at best, economic growth in the second half of the year will settle at 6.7 percent.

"What is key in the second semester is for the government to resolve the port congestion problem. This could provide additional support for further manufacturing industry growth," said Terosa.

The congestion in major ports in Metro Manila has been blamed on the truck ban imposed by the Manila city government. National government agencies said earlier that port congestion made it difficult to deliver goods to factories and consumers and caused commodity prices to shoot up.

Data released by PSA showed that GDP growth in the April to June period was slower than the 7.9 percent recorded in the second quarter of 2013. Economic growth in the second quarter, however, was faster than the 5.6 percent posted in the first quarter.

For the first semester of 2014, GDP growth averaged 6 percent, lower than the 7.8 percent posted in the same period last year.

The National Economic and Development Authority (NEDA), however, believes that the Philippines remains on track to achieving its target of growing GDP by 6.5 to 7.5 percent this year.

"We are still holding on to the target. For us to achieve the lower range of the target, Philippine economy needs to grow by at least 6.9 percent in the second half," NEDA Director General Arsenio Balisacan said.

Balisacan said government spending will help boost economic growth in the July to December period, despite saying that low government spending in the second quarter was a "cause for concern. " Government spending in the April to June period was flat.

He said, however, that the Philippine government has already put in place critical infrastructure programs and projects that would spur government spending in the coming months.

Ateneo de Manila University economist Fernando Aldaba said the economic recovery of the United States, Japan and Europe would also boost the country's exports in the second half of the year.

"Government spending and exports will continue to rise. Also remittances will continue fueling consumption especially with the coming Christmas season," Aldaba said.

As demand is expected to go up in the coming months, the Philippine central bank assured that it will continue to monitor developments and that it is ready to deploy the necessary police measures to keep inflation within the government's target.

PSA said today that second quarter GDP was boosted by the industry sector, which expanded by 7.8 percent, and the services sector, which rose by 6 percent.

The performance of the agriculture sector also pulled up GDP during the period. The sector rebounded to 3.6 percent in the second quarter from a decline of 0.2 percent in the same period last year.