Devnews 2009 November 27

DevNews Friday; November 27, 2009 Peso-dollar rate: $1.00 = P46.82 Key national news coverage of the National Economic and Development Authority (NEDA) and other related news

There are 13 articles of note (10 netural, 3 other) in the national press that can shape perceptions regarding NEDA and the economy.

neutral news Low-end ’09 growth likely Business Mirror / Headlines By Cai Ordinario WITH the Philippine economy posting growth of only 0.8 percent in the third quarter, the national government has abandoned and given up on achieving 1.8-percent growth or the high end of the full-year targets set by the Development Budget Coordination Committee (DBCC). The National Economic and Development Authority (Neda) said the economy needs to grow by 0.9 percent in order to attain the low end of the government’s full-year targets for 2009. The 0.8-percent growth in the third quarter placed the country’s gross domestic product (GDP) growth for the first nine months at 0.7 percent. “We are maintaining the target of 0.8-percent to 1.8-percent GDP growth for this year, and we are confident that we can achieve at least the lower end of the target. We believe that there will be a much- better growth for the fourth quarter basically due to Christmas spending, [the start of] the election spending, and then [an expected increase in] construction and services,” Neda Acting Director General Augusto Santos said during a press briefing on the National Income Accounts (NIA) in Makati City on Thursday. Director Dennis Arroyo of Neda’s National Policy Planning Staff (NPPS) admitted that the Neda underestimated the effects of the global slowdown on the industry sector in the third quarter, particularly on utilities. Arroyo said the Neda expected a growth in utilities of 4 to 5 percent but the subsector instead posted a contraction of 2.2 percent. The stock market, “has (also) gained 62 percent of its value (while) OFW (overseas Filipino worker) remittances (will be) stronger in the fourth quarter given the typhoon and Christmas season,” Arroyo said. Economists like former Neda Deputy Director General and Philippine Institute for Development Studies (PIDS) research fellow Dr. Gilberto M. Llanto and University of the Philippines economist Dr. Ernesto M. Pernia believe that the Neda may be right in their projections.

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Pernia and Llanto said that while they were not surprise by the outcome of the numbers, the low-end may be the more attainable fullyear growth. Hitting a negative economic growth is impossible for the Philippine economy despite the lingering effects of the global economy. National Statistical Coordination Board (NSCB) Secretary-General Romulo A. Virola said the economy expanded by 0.8 percent in the third quarter, slower than the 4.6-percent growth posted in the same period in 2008. SEE ALSO: Growth weaker than expected, Business World / Headlines Economy ekes out 0.8% growth in Q3, Philstar / Business, (link: http://www.philstar.com/Article.aspx? articleId=527026&publicationSubCategoryId=66) Q3 economic output disappoints , Inquirer / Business (link: http://business.inquirer.net/money/topstories/view/20091126-238603/Q3-economicoutput-disappoints) Growth slips; econ headed for 0.8% low end of target, Malaya / Business (link: http://www.malaya.com.ph/11272009/busi1.html ) GDP posts weaker 0.8% growth in third quarter, Manila Bulletin / Business (link: http://www.mb.com.ph/articles/231308/gdpposts-weaker-08-growth-third-quarter )

Strong consumer spending to lift economy in Q4 – NEDA Philstar / Business (link: http://www.philstar.com/Article.aspx? articleId=527032&publicationSubCategoryId=66) By Marvin Sy MANILA, Philippines - The National Economic and Development Authority expects strong consumer spending to boost economic growth in the fourth quarter of this year and help the government attain its growth target for the year. NEDA deputy director general Rolando Tungpalan noted that spending during the fourth quarter is historically higher as overseas Filipino remittances start to come in at its highest levels during this period. Despite the damage caused by typhoons Ondoy and Pepeng to the agriculture sector in September and October, Tungpalan expects the economy to end up within the 0.8 to 1.8 growth target set by the government’s economic planners.

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Slower growth gives BSP more flexibility Philstar / Business (link: http://www.philstar.com/Article.aspx? articleId=527028&publicationSubCategoryId=66) By Lawrence Agcaoili MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is likely to keep its key policy rates at record lows despite the lower-than-expected economic growth recorded in the third quarter of the year. In a text message sent to reporters, BSP Governor Amando M. Tetangco Jr. said the Monetary Board could maintain its current policy stance due to stable consumer prices. “Given the within-target range outlook for inflation for 2009 and 2010, the BSP can afford to maintain its current policy stance,” Tetangco said. The National Statistical Coordination Board (NSCB) yesterday reported that the country’s gross domestic product (GDP) growth slackened to 0.7 percent in the first nine months of the year from 4.2 percent in the same period last year.

Investors’ reaction to slays watched Business Mirror / Headlines By Cai Ordinario and Max V. De Leon WITH local business accusing the administration of ignoring the recommendations of the Davide Commission, if only indirectly—thus allowing the Maguindanao massacre to happen —some “knee-jerk reaction” is expected from foreign and local investors that could slow down the economy in the near term. This was acknowledged by Acting Director General Augusto Santos of the National Economic and Development Authority (Neda), although he sought to soft-pedal the impact of the heinous event, saying the government does not see the massacre as a cause for concern for the economy. “We feel that the main threat is the slow fragile recovery.” On the massacre, the Makati Business Club (MBC) said the administration, in allowing “warlords politics” to flourish in the provinces for its political ends, has allowed the unspeakable crime. It strongly urged the government to redeem itself by making sure that justice is served and the private armies are all disarmed and dismantled. Political observers agreed it will take time, perhaps even more than Santos expects, because as the MBC said also, the country “is also paying dearly for having ignored the final recommendation of the Davide Commission,” which so prophetically stated “the irreducible minimum to peaceful and orderly change, both societal and political, is for all contenders in the political arena to agree to use the ballot and forego the bullet.” Meanwhile, Neda Planning Director Dennis Arroyo said that climate change also poses a threat to higher economic growth, especially in 2010 due to reports of an El Niño sometime in March and April. 3

Arroyo recalled the last time rice prices spiked by more than 40 percent was in the first quarter of 2008, largely due to the race to secure a share from the dwindling world stocks. Santos said on the other hand that to boost the economy, the government will focus on infrastructure spending and improving competitiveness such as reducing power rates. He said there is still some P100 billion from the Economic Resiliency Plan (ERP) that is allotted for big-ticket infrastructure for 2010. Santos said the government is also confident the country can raise an additional P50 billion from official development assistance (ODA) partners for reconstruction. The “pledging” session is scheduled in the first week of December. “The typhoon damage amounted to P38 billion so reconstruction funds have to be higher.” Santos also said the government aims to expand Small and Medium Enterprises. He said prospects also remain bright for agricultural products, tourism, demand for climate-adaptable production, renewable energy investments, and biotechnology applications for food production.

other news Growth-boosting measures imperative BusinessMirror/ Headlines (link: http://www.businessmirror.com.ph/home/top-news/19047-growth-boosting-measuresimperative.html) By Jun Vallecera GROWTH has proven tentative in the third quarter, averaging only 0.8 percent, making it imperative for both monetary and fiscal authorities to sustain growth-boosting measures adopted earlier to sustain the weakening momentum, according to economists. Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said, “Although the release of gross domestic product [GDP] data was lower than expected, the government has said meeting this year’s target remains doable.” Given the 0.6-percent expansion in the first quarter and the 0.8-percent rate instead of the target 1.5 percent in the second quarter, the nine-month growth comes to 0.7 percent or outside the full-year forecast ranging from 0.8 to 1.8 percent. Remittances from overseas Filipino workers—predicted to weaken but have instead remained stable—helped Tetangco say, “We will continue to watch developments to see if there is a need to make [policy] adjustments [but] given the within-target range outlook for inflation in 2009 and 2010, the BSP can afford to maintain its current monetary policy stance.” This means the central bank will continue to borrow from and lend to banks at an overnight rate of 4 percent and 6 percent, respectively.

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ADB extends $225-M loan for local govt fund, budget-reform program Business Mirror / Economy (link: http://www.bworld.com.ph/main/content.php?id=2091) By Cai Ordinario THE Asian Development Bank (ADB) has extended a $225-million loan to help the government transfer the function of delivering basic services to the local government level from the central government. ADB’s board of directors on Thursday approved the loan for Subprogram 2 of the Local Government Financing and Budget Reform Program, which aims to improve the efficiency and effectiveness of service delivery by expanding fiscal resources and financing options for local governments. “Decentralization has brought choices closer to the people while opening up space for innovative responses and solutions to service-delivery issues,” said Tariq Niazi, senior public-sector management specialist in ADB’s Southeast Asia Department.

Gov’t to continue stimulus spending Bworld / Headlines By Reuters STIMULUS PROGRAMS will continue to be implemented next year given latest growth results, Finance Secretary Margarito B. Teves yesterday said. Asked to comment on the third-quarter growth result of 0.8%, well below the official 1.62.6% estimate, Mr. Teves said the impact on revenues would take place three to six months from now. "There is a lag effect of three to six months. That (third quarter growth) will not have much bearing now ... If ever, the bulk of it (impact) would be next year ... We will have to look for additional resources." He added: "There will be stimulus programs ... We have to discuss it with the DBCC (Development Budget Coordination Committee).

DIS Public Information Division - andrei bauzon

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