Spending will be supported by broadly stable commodities prices and consumer sentiment indicates more optimism for 2012, said Paderanga.

The domestic economy grew by 3.6 percent in the first three quarters of 2011, lower than the 8.2 percent growth in the same period last year.

Sec. Paderanga noted that the country’s growth in 2011 was affected by the global economic slowdown amid uncertainties in Europe, continuing weakness of the US economy, and disasters in Japan, which led to weak exports.

The domestic growth was weakened by the contraction in the construction sector, which was pulled down by lower government spending, given the process improvements and project reviews for public construction projects.

On the supply-side, the services sector remained the largest contributor to growth in the first three quarters of 2011 with a 4.7 percent expansion.

Agriculture production has been sustained as the sector continued to recover from the El Niño in 2010 and despite the typhoons in the third quarter that caused losses and damages in the sector.

The industry sector decelerated to 1.4 percent as the decline in construction and utilities weighed down the sector’s growth.

On the demand side, growth was driven mainly by household expenditure boosted by consumer confidence, manageable growth in prices of basic commodities and sustained inflow of remittances from overseas Filipinos.

Total exports declined by 3.7 percent due to slow pickup from the supply-chain disruptions caused by disasters in Japan, weaker demand from major trading partners that are currently experiencing economic slowdown,
and currency appreciation.

Meanwhile, the World Bank (WB) is expecting  economic growth to moderate at 3.7 percent in 2011, weighed down by weak global demand as well as low public spending in the first three quarters of the year.

“Our projection hinges on the successful implementation of the government’s disbursement acceleration program and an acceleration in private consumption and investment, which have begun to grow faster in the last quarter,” WB country economist Karl Chua.

Growth in 2012 is projected to improve to 4.2 percent in line with regional forecasts. Higher 2012 growth hinges on improvement in exports, acceleration of public-private partnership (PPP) projects and private sector investment, and a full recovery of public spending.

Chua noted that the government is instituting important measures to improve transparency and accountability in public spending. Once these institutional reforms are in place, spending is expected to fully recover at cost-effective levels with more resolute impact on the country’s growth and development, Chua added.

“The country is well-insulated from the global financial crisis owing to a significant improvement of macroeconomic fundamentals and regulatory reforms already in place following the Asian financial crisis of 1997-98.”

However, the OECD Southeast Asian Economic Outlook predicted a higher growth for the six Southeast Asian economies — Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam — at 5 percent for 2011 and 5.6 percent in 2012.

The OECD report noted that global uncertainties and natural disasters shed a negative light on the growth prospects of the region as the overall Southeast Asia will have a solid growth performance through 2016.

As growth in external demand moderates for the region, ASEAN economies are turning towards domestic drivers of growth in the medium term and are beginning to explore ‘green growth’as an alternative strategy for long-term sustainable development.

The Development Academy of the Philippines (DAP) would serve as the secretariat of the task force as well as its technical resource institution.

Orlina said an aggressive ten percent growth in 2012 from 2011′s estimated $80 to $90-million revenues is attainable.

The local market could grow along with the global handicraft market which is rising eight to 12 percent a year.

However, industry players need to undertake various strategies to become cost competitive and realize target growth.

“We are looking at alternative avenues and the possibility of relocating in some areas where we can get cheaper operational expense,” he said.

To lower transport costs, Orlina said it is imperative for the country to harness its alternative energy resources.

He added other fuel options like the liquefied petroleum gasoline (LPG) should be also considered to reduce inter-island and land freight.

Orlina also underscored the importance of strengthening the value chain which is a critical link in the development of handicraft industry.

“Our labor market information system, including the Phil-JobNet, is there to provide data that would assist them in making informed, confident decisions to build a productive future,” she added.

This matches the all-time high 95% in 2002 who were hopeful of entering the 2003 New Year. It is also 2 points higher than the 93% who entered 2011 New Year with hope.

Hope with the coming year has customarily been at high levels, starting at 87% when SWS first polled about it in December 2000 and 88% in December 2001.

New Year hope reached its record-high 95% in December 2002 and 90% in December 2003 before it declined to 81% in December 2004 and 85% in December 2005.

It rebounded and remained steady at 91% to 92% from 2006 to 2008 before it declined to 89% in 2009.

It recovered to 93% in December 2010 and again reached record-high 95% in December 2011.

The survey question was patterned after polls conducted annually by the Allensbach Institute of Demoskopy in Germany.

Hope with the coming year is widespread in all areas, with record-highs in Mindanao and Metro Manila.

Compared to 2010, New Year hope increased by five points in Mindanao, from 89% to 94%, a record-high for that area that was first reached in 2002. 

It stayed at record-high 96% in Metro Manila.

It hardly changed in the Visayas, from a record-high 97% in 2010 to 96% in 2011, and in Balance Luzon, from 94% to 95%.

New Year hope is also high in all socio-economic classes, with a new record-high set among class E.

Compared to 2010, New Year hope rose by four points among the very poor class E, from 89% to a new record-high 93%. This surpasses the previous record-high of 91% in 2002, 2003, 2006, and 2007.

New Year hope stayed at record-high 97% among the middle to upper classes ABC.

It hardly changed among the masa class D, from 95% to 96%

New Year hope is higher among those who expected a happy 2011 Christmas than among those who expected a sad Christmas.

Of the 64% who were looking forward to a happy 2011 Christmas, almost all (97%) also look forward to 2012 with hope.

On the other hand, of the 11% expecting a sad Christmas, 89% are hopeful of 2012.

Socio-economic Planning Sec. Cayetano Paderanga, Jr. said the growth was below the government’s
forecast of 4.5 to 5.5 percent, the private analysts’ average projection of 4.9 percent and some international organizations’ average outlook of 5 percent in the second quarter.

Paderanga noted that growth was driven by the strong rebound of the agriculture sector (7.1%), particularly sugarcane, palay, and corn, and the modest expansion of the services sector, primarily financial
intermediation, real estate, renting and business activities, and other services subsectors.

On the expenditure-side, growth was spurred by household and government consumption, constrained by surges in world oil prices, triple disasters in Japan, the slow recovery of the US and European economies, the
social unrest in the Middle East and North Africa (MENA) region, and adverse weather conditions, which negatively affected the fishing subsector.

Paderanga stressed that the second quarter growth in 2011 was expected to have been lower than the growth in the same period last year due to tapering off of the base effect and the absence of growth drivers in the second quarter of 2010, such as election-related spending and the stronger than expected
global economic recovery.

He noted that the 2.8 percent contraction in net primary income mainly due to the lower net compensation as overseas Filipinos (OF) remittances grew by only 1.4 percent in peso terms, resulted in a 1.9 percent growth in gross national income (GNI).

With a second quarter gross domestic product (GDP) growth of 3.4 percent and a revised first quarter GDP growth of 4.6 percent, the first semester GDP growth for this year is 4 percent.

To attain the 7 to 8 percent growth target for 2011, the economy needs to grow by at least 10.0 percent in the second semester, said Paderanga.

Paderanga is optimistic that prospects for the second half of 2011 are better than the first half’s performance.

He expects agriculture production will be supported by the strong prospect for palay production.

The Bureau of Agriculture Statistics has projected a 6.2 percent  growth for palay in the second half of 2011.

Sec. Paderanga said the manufacturing sector would be buoyed by the food manufactures, while  real estate and private construction would continue to remain upbeat given the bright prospects in the property market particularly the office, residential, retail and hotel-leisure submarkets.

“Other services and trade will be supported by inbound tourists, the number of which is expected to rise, on the average, by 6.3 percent in 2011.  Mining is expected to benefit further from high metal prices in the world market.”

Business sentiment has improved in the third quarter of 2011 as public construction and government services are likely to pick-up due to the accelerated spending plan of government, said Paderanga.

On the demand side, Paderanga expects household consumption and investment will remain as the growth drivers.

“Household consumption will get a boost from the employment creation program, the continuing implementation of the conditional cash transfer program for the lower income deciles, the modest inflow of remittances, and the still well-anchored inflation expectations.”

“Investments will continue to register positive increases given the bright outlook in the expansion plans of firms across the industry subsectors,” he added.

Romulo Virola,  director-general of the National Statistical Coordination Board (NSCB)  noted that the 3.4 percent growth in the second quarter of 2011 was less  than half the booming 8.9 percent growth in
2010.

He partly attributed the modest growth to the fragile recovery of the Philippine trading partners and the European debt crisis which affected most economies.

Philsmed president Mina Gabor said after setting up the stop in Metro Manila, this can be expanded in other areas in Luzon, Visayas and Mindanao.

“The supermarket showcases everything that is made in the Philippines from broom stick to match stick. When this is established, there is a place we can say if one wants to buy local made products,” Gabor said during the 21st Buy Pinoy Exporters Fair.

At present, businesses are located in different places. Thus, buyers especially the tourists have difficulty finding and buying Philippine-made products.

Gabor, also the president of the International School for Sustainable Tourism, noted that the domestic market and tourists are big markets they should tap.

“You should not forget that the returning Filipinos we call ‘balikbayan’ are huge markets. Our products are not yet ready; these should be packaged so it would be easier to carry,” she added.

Apart from local and foreign tourists, Gabor said entrepreneurs need to develop more products for the young market. This market refers to individuals aged 50 and below.

Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, Inc. (PHILEXPORT), said they will study into the viability of the proposed Pinoy supermarket.