Philippine economy to grow 5% in first quarter

The Philippine economy is projected to grow by five percent in the first quarter of the year, according to FMIC and UA&P market research.
The forecast was based on the positive indicators such as an 8.3% growth in Meralco electricity sales in the first two months of 2012, the creation of 1.1 million jobs in January and a low inflation rate of 2.7 percent in more than two years.
FMIC and UA&P noted that the government has started the year running with a fiscal deficit of P15.9  billion, despite a strong 12.5% increase in tax revenues, while exports in January expanded by 4%, the first positive growth figure after 8 months of decline.
However, the report warned of new risks such as the rapid rise in crude oil prices to above $100 per barrel for West Texas Intermediate (WTI) and above $120 per barrel for Dubai Light.
“The fact that the Greek debt crisis shows clearer signs of resolution and an undisputable recovery in the United States, albeit slower than historical standards, lend support to this optimism,” the report added.
McKinsey’s global survey of 2,000 executives in March showed that 42% view the current economic situation as moderately or substantially better compared to only 20% in December, while 46% expected moderately or substantially better economic conditions in the next six months vis-a-vis 29% in December.
The industrial and services sectors were the major sources of employment, while the agriculture sector declined in terms of employment.
The monetary board (MB) of the Bangko Sentral ng Pili­pinas (BSP) cut key policy rates by 25 basis points to 4% last March 1, following through with a similar cut in its previ­ous meeting on January 19.
The MB reduced the overnight borrowing or reverse repurchase (RRP) facility interest rate to 4% from the previous 4.25% and the overnight lending or repurchase (RP) facility interest rate to 6.0% from 6.25%.
Dollar remittances from overseas Filipino workers (OFWs) in January amounted to $1.56 billion, higher than January 2011’s $1.48 billion.
Year-on-year, OFW remittances posted a 5.4% growth rate, suggesting robustness of OFW remit­tances despite the geopolitical turmoil in the Middle East and North Africa (MENA) and the debt crisis in the Euro-zone.
The average exchange rate was at P43.05 to the US dollar for the first quarter of 2012, a 1.7% appreciation from the same period in 2011.
FMIC and UA&P expect the peso to be within the range of P42.0 to P44.0 to the US dollar  as it remains to be less volatile.
“We also expect BSP to continue to prefer an appreciation bias to offset the increasing trend in oil prices, the report added.