RP economy seen to grow 2.6% in first quarter

MANILA, Philippines - The economy may grow by more than 2.6 percent in the first quarter of the year which is the lower end of the official forecast range of 2.6 percent to 3.6 percent for 2010, a ranking Finance official said yesterday.

With a stronger-than-expected economic growth this year, Finance Undersecretary Gil Beltran said the government’s budget deficit may fall below the revised deficit ceiling of P293 billion for the year.

“It’s possible that (first quarter growth) could be higher than 2.6 percent given the recovery in exports,” Beltran said.

He noted that exports – the biggest factor behind last year’s economic slowdown – have started to recover.

Exports recovered in November 2009, with receipts hitting $3.692 billion or 5.1 percent more than the $3.512 billion recorded in November 2008.

Along with the recovering economy, Beltran said it’s possible that this year’s budget deficit would fall below P293 billion.

However, he said it would be up to the next administration that would come in after t he May elections to revise the economic growth targets.

Beltran said that according to DOF estimates, a 0.1 percent growth in gross domestic product (GDP) translates to an increase in revenues amounting to P1.3 billion.

Earlier, Acting Socioeconomic Planning Secretary Augusto Santos also said the budget deficit ceiling of P293 billion for the year may be revised downward because of the 0.9 percent economic growth recorded last year.

Santos said the National Economic and Development Authority (NEDA) would recommend a downward revision in the 2010 budget gap because of the performance of the economy last year.

The government has set a budget deficit of P293 billion for 2010, revised from an earlier estimate of P233.4 billion on account of the lingering impact of the global financial turmoil and anemic revenues. As of end-November 2009, the government’s budget deficit stood at P272 billion.

The economy, as measured by GDP expanded by 0.9 percent last year, within the official growth forecast range of 0.8 percent to 1.8 percent for 2009, the National Statistical Coordination Board (NSCB) said last week.

While within the government’s target, the 0.9 percent is the slowest economic growth recorded since 1998 when GDP contracted by 0.6 percent, a year after the Asian financial crisis hit the country. Last year’s growth also reflected a marked slowdown from the 3.8 percent recorded in 2008.

However, in the fourth quarter of 2009, the economy accelerated to its fastest pace during the year, growing by 1.8 percent compared to a revised 0.4 percent in the third quarter, data from the NSCB also showed. In the first three months of 2009, the economy contracted by 1.3 percent but recovered in the second quarter with a 1.5 percent growth.