Philippine growth forecast at 3.75 per cent

Ulhas Joglekar ulhasj at
Mon Nov 27 08:00:43 MST 2000

22 November 2000

Philippine growth forecast at 3.75 per cent
MANILA, Philippines : Philippine economic growth in the third quarter is
expected to have slowed from the previous quarter, with the economy
faltering on falling domestic consumption, slower export growth, declining
manufacturing output and the weak peso, economists said on Tuesday.
Growth in the June-October quarter was largely underpinned by strong
agricultural production, which rose a stronger-than-expected 3.49 percent on
year, the economists said. Agriculture accounts for nearly a quarter of
domestic production.
A survey of 10 economists conducted by Dow Jones Newswires showed an average
estimate of 3.75 percent expansion on-year of the gross domestic product in
the third quarter, compared to 4.5 percent in the second quarter and 3.4
percent in the first quarter. Their third-quarter forecasts ranged from 3.4
percent to 4.1 percent. GDP growth in the third quarter of 1999 was 3.1
The Philippine Central Bank is predicting growth of around 4 percent for the
third quarter, with the data due to be announced Nov 28. Orion Squire
Capital economist Hazel dela Cruz expects manufacturing output to have
slowed in the third quarter from growth of around 6 percent in the first
half as investor confidence took a bad knock from the Muslim insurgency in
the southern Philippines, mounting fiscal concerns and the failed
privatization of Philippine National Bank.
"Late in the second quarter, companies were having second thoughts about
expanding," she said. The crisis caused by corruption allegations against
President Joseph Estrada isn't expected to have greatly affected growth in
the third quarter.
The scandal broke on Oct 9 when a provincial governor accused Estrada of
taking close to $11 million in payoffs from illegal gambling syndicates and
provincial tax revenues. Estrada has denied the charges, which will be heard
at a Senate impeachment trial next month.
While the scandal caused the peso to hit a record low of 51.95 pesos to the
dollar on Oct 31, the Philippine currency has been under near constant
pressure this year, falling over 20 percent against the dollar. The stock
market has been one of Asia's worst performing, with the main index falling
32 percent.
Allegations of cronyism and corruption have dogged Estrada since the start
of his 29-month presidency. Investor confidence was hammered early in the
year by a price-fixing scandal on the stock market. In late April Manila's
financial markets took another pounding from a hostage crisis.
Economists say the latest scandal engulfing the presidency could have a
severe impact on growth if it is not resolved soon.
The government's economic planners have said growth could fall to as low as
2.7 percent next year if the crisis is prolonged, while some private-sector
economists are predicting growth as low as 2 percent. The government's 2001
GDP target is 4 percent.
With expectations of growth in the fourth quarter even weaker than the
third, it will be difficult for the government to attain its target of at
least 4 percent growth this year.(AP)
For reprint rights:Times Syndication Service
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