Economy improves in second quarter - NEDA official

MANILA, Philippines – The economy improved in the second quarter of the year, growing faster than the 0.4 percent registered in the previous quarter because of an improvement in consumer spending and the government’s pump-priming efforts, an official from the National Economic and Development Authority (NEDA) said yesterday.

While there are no available economic growth projections yet, NEDA Deputy Director-General Rolando Tungpalan said that the country’s gross domestic product (GDP) expanded faster in the second quarter than in the first three months of the year due to accelerated government spending during the period.

He is optimistic that the Philippines will not slip into a recession, contrary to warnings earlier raised by economists and analysts from the private sector.

“Things are looking better. I can’t imagine that the second quarter will be worse than the first quarter. Surely, there’s no recession,” he told reporters on the sidelines of the launch of Alternatives to Migration, Decent Jobs for Filipino Youth, a three-year joint program funded by the Spanish government and implemented by the Philippines and the United Nations. 

Tungpalan said drivers of growth in the second quarter of the year include continued dollar inflows from overseas Filipino workers, accelerated government spending, and an improvement in personal consumption of Filipinos. 

He noted that 60 percent of the government’s stimulus package has already been spent during the first half of the year.

The target, he said is for state-owned agencies to spend the remaining 40 percent by the end of September, way ahead of the end-December deadline.

“We are pressing the agencies to spend,” he said.

On top of this, Tungpalan said the proposed P100 billion public-private sector initiative is expected to be tapped starting this year. 

He noted that there are various schemes on how businesses can tap the P100 billion. One possible scheme is through the grant of loans to businesses by government financial institutions. 

The NEDA official said the P100 billion is intended as a medium-term initiative, to be disbursed in a span of three to five years starting this year.

In the first quarter of the year, the economy grew by only 0.4 percent compared to the same period in 2008. 

It shrank by a seasonally adjusted 2.3 percent from the last three months of 2008, its lowest level recorded for the past 20 years.