Philippine Economy Update, 11.26.2009

By Randell Tiongson on November 27th, 2009

Philippine economy is expected to see some minimal growth — still good news considering many economies are still in recession. However, inflation is becoming to be a concern, let’s pray it is a temporary situation. Inflation per se is not bad, so long as we see economic growth.

    Philippine Central Bank sees inflation accelarating in November

  • The Philippine central bank expects inflation to accelerate further in November
  • Inflation for November is  forecast to range between 2.4% to 3.3%
  • This is due to the  impact of recent typhoons in the main island of Luzon.
  • Inflation  already accelerated 1.6% on year in October.
  • The average inflation rate in the first 10 months is at  3.2%.
  • The central bank sees inflation to hover 2.5% and 4.5% for this year.
  • 2010 inflation is seen between 3.5% and 5.5%.
  • Disappointing 3Q09 growth

      · Philippine economic growth in the 3Q09 fell below expectations.
      · COMMENT: 3Q09 GDP grew 0.8% Yoy, dragged by the decline in manufacturing (-4.4%) and a sluggish farm sector (+1.6%).

      · Services, which account for over half of GDP, rose 4.0% on year,

      · On the demand side, figures were slowed down by the negative growth in Capital Formation (-11%) and Exports (-14%).

      · 2Q09 growth was also at +0.8%.

      · Average forecast on the street was a +1.9% expansion, making the actual figure pale and worrisome.

      · On a seasonally adjusted comparison, GDP rose 1.0% over the 2Q09 output.

      · Poor results might impact in the long run especially after the IMF just revised expectations this year from +1% to +1.5%.

      · Currently, Philippine growth would be happy enough to reached the lower end of the target growth range of +0.8% to +1.8%

      · Consumer spending typically rises in the 4Q and remittances are at its highest levels in November-December. Reconstruction activities due to the typhoon could also prop up economic activity in the last quarter.

      · Personal Consumer Expenditure growth remains critical next year as election spending triggers recovery.

      · PCE merely grew +0.2% on a seasonally adjusted format, its lowest since revised data in 1995.


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Philippine Economy Update, 11.26.2009