Philippine growth still above 7%

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) NewsBriefs, a regular publication produced by IDEA, the Philippines retained its momentum during the first quarter, posting an above-forecast growth in the second quarter. According the National Statistical Coordination Board (NSCB), the second quarter growth of the country’s gross domestic product is at 7.5 percent, exceeding the 7.2 percent market expectation. The NSCB also revised the first quarter growth from 7.8 to 7.7 percent. Together, however, the country posted a growth of 7.6 percent in the first half. This is higher by 1.2 percent from the 6.4 percent level recorded in the same period last week.

Per NSCB, the services sector was the main driver of growth for the second quarter. The industry sector improved due to gains in manufacturing and construction sector. Aside from this, increases in consumer and public spending helped boost growth for the second quarter. Socioeconomic Planning secretary Arsenio M. Balisacan stated that the country’s growth is at par with China and faster than Indonesia, which grew by 5.8 percent; Malaysia, 4.3 percent; Singapore, 3.8 percent; and Thailand at 2.8 percent.

Likewise per same published report, Fitch Ratings reported that the Philippine market can withstand volatility due to its strong macroeconomic fundamentals. Specifically, Fitch highlighted that a strong balance-of-payments will support the economy amidst news of the possible end of quantitative easing. Moreover, Fitch Ratings’ head for Asia-Pacific sovereigns Andrew Colquhoun said that given that the country’s capital markets are on its early stage of development, there is less foreign participation which makes the country less susceptible to the risk posed by the end of quantitative easing.

Furthermore, in response to the misuse of the Priority Development Assistance (PDAF), the government announced that the Congress will be included in the budget preparation process next year. Departments, offices, bureaus, national government agencies, as well as government-owned and –controlled corporations will also be included. The said agencies will have to prepare budget proposals for their projects to be a part of the General Appropriations Act. The 2014 budget will also be adjust according to the Department of Budget management with regard to the PDAF.

According to the researchers of IDEA, after the declines in the manufacturing sector, the national Statistics Office revised the country’s first quarter growth from 7.8 to 7.7 percent. The downward revision resulted in a lower expected growth for the second quarter, according to a Reuter’s poll. Analysts however, stated that growth on an annual basis will most likely stay above 7 percent.

Lastly it was reported that the Bangko Sentral ng Pilipinas (BSP) announced that it will implement “contingency measures” to counter the adverse effects of capital outflow in the economy. After the release of the minutes of a July Federal Reserve meeting last week, emerging markets plunged. Currencies, the peso included fell down as the Fed announced that its officials still remain divided on tapering its bond buying program. The measures that the BSP will implement includes use of spot and swap markets, temporary and limited regulatory forbearance to banks, relaxed access to rediscounting facilities and adjusting reserve requirements, according to IDEA.

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