Lower growth seen in 2013; 5.5% growth possible this yr

MANILA, Philippines - The Philippine economy may still grow by 5.5 percent this year, within the government’s official target range for 2012 of five percent to six percent, according to New York-based think-tank GlobalSource.

It said that while growth slowed down in the second quarter to 5.9 percent from the 6.4-percent growth in the first quarter of the year, domestic demand remains strong enough to keep the economy afloat.

“Despite slowing momentum, domestic demand seems strong enough in the first half of the year to bring full-year growth to above five percent this year (likely closer to 5.5 percent in our estimate),” said GlobalSource in its latest report, authored by former Finance Undersecretary Romeo Bernardo and Margarita Gonzales.

In the report, Bernardo and Gonzales said the economy should continue to find support from the services exports, which grew by 9.9 percent in the second quarter of the year.

Business process outsourcing firms seem to be resilient to external uncertainties, the Global Source report said.

However, for 2013, Global Source said growth may be lower at five percent.

As such, Global Source revised downward its previous forecast to five percent from 5.5 percent previously.

 “Given the still negative outlook on global growth next year, we lower our forecast for 2013 from 5.5 percent to five percent, which is still an optimistic forecast that partly depends on elections and related public spending helping to drive growth,” Global Source said.

The Philippine economy grew by 5.9 percent in the second quarter, within the expectations of most private sector analysts.

Despite the slower growth, Socioeconomic Planning Secretary Arsenio Balisacan said the government may still hit the higher end of the five percent to six percent target range for the year.

He said this is because of continued rise in government spending.

However, Global Source said the momentum seems to be weakening with seasonally-adjusted gross domestic product growth dropping to 0.2 percent in the second quarter of the year from three percent in the first quarter.