no growth hormones

Q3 growth may be weakest in 3 years
by Reuters/BWorld/11.26.08

ECONOMIC GROWTH probably slowed to its weakest pace in three years in the third quarter, dragged lower by weaker exports and high inflation, a Reuters poll showed.

The median estimate of 10 economists was for third quarter gross domestic product (GDP) to have expanded 4.4% from a year ago against 4.6% annual growth in the second quarter due to flagging exports as demand from the country’s main trading partners weakens amid the global financial crisis.

The market estimate falls within the government’s July to September growth forecast of 3.8-4.6% from a year earlier.

The economy is likely to have contracted a seasonally adjusted 0.4% in the third quarter from the second quarter, according to the median of three forecasts.

"The slowdown reflects the sharp deterioration in the external environment and the fact that many Asian economies are very externally dependent," said Simon Wong, an economist at Standard Chartered Bank in Singapore.

"This is the first time in many years that we are seeing a contraction in all major developed economies and the Philippines is very dependent on exports."

The government will release official growth data today.

Manila sends nearly a fifth of its exports to the United States and about 14% to Japan, which slipped into its first recession in seven years in the third quarter. Exports account for nearly a third of the economy in expenditure terms.

Economists expect the global economic slowdown to cool growth in the Philippines to 4.5% this year, within the government’s forecast of 4.1-4.8% growth, from a 31-year peak of 7.2% in 2007.

Growth is expected to weaken further to 4.0% next year when the impact of the worst financial crisis in decades takes a further toll, the same poll showed.

Domestic consumption, fuelled by record remittances from Filipinos working abroad, as well as higher government spending on infrastructure should continue to support growth in the fourth quarter, analysts said.

But there are doubts whether remittances would continue to boost growth in 2009 as the weaker global economy endangers jobs held by Filipinos.

Inflation is seen returning to single-digit levels before yearend from a 17-year peak of 12.5% in August, allowing for monetary policy easing by December, analysts said. —