Philippine economy grows 3.4% in 2nd quarter

The Philippine economy posted a modest growth of 3.4 percent in the second quarter of 2011.

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.

 

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Filipino companies urged to set up first Pinoy supermarket

The Philippine Small and Medium Business Development Foundation (PHILSMED) has urged Filipino companies to establish the first Pinoy supermarket that will offer a variety of local made products.

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.

Official development assistance reaches $8.31 billion

The Philippine  official development assistance (ODA) loan commitment  totalled US$8.31 billion as of June 2011, lower than the same period  last year at $8.84 billion.
The National Economic and Development Authority (NEDA) said the US  8.31 billion was used to fund 68 project loans worth US$7.27 billion and 7 program loans worth US$1.04 billion.
Of these loans, five were closed during the period, while 66 are ongoing and four are yet to be made effective.

The NEDA noted lower levels of absorptive capacity for the period, with lower disbursement and availment rates compared to the first semester of 2010.

Disbursement rate is the loan amount’s level of disbursement against the annual target, while the availment rate is the loan amount’s cumulative utilization according to a multi-year schedule.

From January to June, the disbursement rate in 2011 was 66 percent, compared to 87 percent last year, while the availment rate was 71 percent, compared to 82 percent last year.

The NEDA-Project Monitoring Staff (PMS) said  the low disbursement performance was due to procurement, financial, and other issues like suspension of contract and the national government-local government sharing scheme.

“The substantial decrease in the disbursement performance may be attributed to the low financial erformance of some China loans and other sources-assisted projects,”said NEDA.

These projects include the Northrail Project Phase I Section I, with US$400 million net commitment and implemented by the Philippine National Railways; the Second Cordillera Highland Agricultural Resource
Management (CHARM) Project, with US$26.6 million net commitment and implemented by the Department of Agriculture; and the Local Government Unit (LGU) Investment Programme II, with US$9.72 million and implemented by the Department of Interior and Local Government.

The three loans are extended by China, the International Fund for Agricultural Development and Germany, respectively.

“The North Rail Project only disbursed US$ 16.69 million out of its US$ 180.59 million target for the year due to contract suspension issues, while the last two cited projects did not make any disbursements yet in
2011,” said the NEDA-PMS report.

Thirteen ongoing loans have disbursement rates below 50 percent as of June 2011. However, the number
is lower compared to the figure as of March 2011, which had 15 loans.

“The decrease in the number of projects with low disbursements maybe attributed to the fact that those in the said category in the first quarter have disbursed more in the second quarter of 2011,” the report
said.

Three ongoing project loans, excluding newly effective and those in the start-up stage, did not disburse due to low demand of subproject and prolonged processing of withdrawal application.

These projects are the LGU Investment Programme II, the Second CHARM Project and the Health Sector Reform Project.

Meanwhile, the NEDA-PMS report said that the biggest ODA donor as of June 2011 is the Government of Japan-Japan International Cooperation Agency (GOJ-JICA), with a share of 31.69 percent of the total ODA commitments, followed by the World Bank with a 23.75% share. China came third with a share of 13.73 percent and fourth was the Asian Development Bank with a share of 8.77 percent.

Muslim Mindanao to benefit from P3.9 billion projects

The Autonomous Region in Muslim Mindanao (ARMM) would benefit from the P3.9 billion educational and environmental projects recently approved by  the Investment Coordination Committee (ICC) of the National Economic and Development Authority (NEDA) board.

The ICC’s Cabinet Committee (CabCom) approved the Basic Education Assistance for Muslim
Mindanao (BEAM-ARMM) and the Integrated Natural Resources and Environmental Management Project (INREMP), which would cover one river basin in Lanao del Sur.

The  BEAM-ARMM aims to improve basic education performance in the region by  addressing fundamental issues, such as low levels of intake, participation, completion rates and learning achievement for both
elementary and high school education.

To be implemented from 2012  to 2018 by the Department of Education (DepEd) in ARMM, the P3.927
billion project would be supported by grant funds from the Australian Assistance for International Development (AusAID) amounting to P3.57 billion, with counterpart from the Philippines amounting to P357 million.

The BEAM-ARMM has four components —  early childhood education; school health and water, sanitation and hygiene  (WASH) facilities; technical-vocational training and skills development
for out-of-school children and youth; and alternative delivery model  for preschool and elementary education in remote areas and indigenous peoples’ settlements.

Meanwhile,  the INREMP aims to operationalize an Integrated Environmental Management within the priority watersheds of the four river basins — the Upper Bukidnon river basin in Bukidon and Misamis Oriental (Northern Mindanao), Chico river basin in the Cordillera Administrative Region,
Wahig-Inabanga river basin in Bohol (Central Visayas), and Lake Lanao river basin bounded by Lanao del Sur and Lanao del Norte (ARMM).

The  INREMP covers 83 municipalities and cities in nine provinces. Of the approximately 1.14 million hectares to be covered by INREMP, 312,783 hectares would be subjected to reforestation and assisted natural
regeneration.

The project would institutionalize the Payment for Ecosystems Services (PES) scheme, which is designed to find ways to generate revenues to pay providers the costs of conversation, and to enable downstream users to
pay for the benefits of conserving upstream resources.