ADB trims Phl growth forecast to 4.7%

MANILA, Philippines - The Asian Development Bank (ADB) has downgraded its full-year growth outlook for the Philippines to 4.7 percent from a five percent forecast in July, the Manila-based lender said.

In a presentation yesterday, ADB senior country economist for the Philippines Norio Usui said the lower growth outlook took into consideration the subdued government spending, lower than expected export growth, less private spending as reflected in poor auto sales, and a drop in private construction in the second quarter.

ADB said government spending slowed in the first semester as public agencies took a more cautious stance amidst an anti-corruption drive initiated by the Aquino administration.

Merchandise exports fell for the third straight month in July due to the weakness in the electronics sector. The Philippines shipped out $4.43 billion worth of goods, down 1.7 percent from the previous level of $4.505 billion, electronics products, the main export item, shrank 21.3 percent from last year, also the third month in a row of over 20 percent decline.

However, Usui said the first semester of 2012 will outperform this year’s first-half performance. “Definitely, it will be better because this year’s first semester was coming off a strong 2010 supported by national elections,” he added.

ADB has retained its 5.1 perceng growth outlook for the Philippines in 2012.

But ADB economists likewise expressed concerns over job creation, which remains in a lackluster state..

ADB said while government spending fell back in the first half of 2011, private investment grew strongly, private domestic consumption increased, and remittances from overseas workers was steady.

Net portfolio investments in the first seven months remained high, helping push stock prices to record highs in August, but foreign direct investment remains subdued with delays in bids for planned infrastructure projects.

For 2012, increased investment and resilient consumer spending will help economic growth to pick up. Inflation forecasts are retained at 4.9 percent for 2011 and 4.3 percent in 2012, assuming that global oil and food prices moderate as expected.

Meanwhile, ADB assistant chief economist Joseph E. Zveglich Jr. said the US economy would likely move sideways for the rest of 2011 and carried over to the first semester of next year.

“We see the US economy in stagnation but not a double dip,” Zveglich said.

He said that developing Asia will also register a full-year growth of 7.5 percent this year.

In contrast, the US economy is forecast to grow by a mere 1.6 percent this year and 2.2 percent in 2012. Japan is expected to shrink by 0.6 percent but starts toward positive growth in 2012.