Philippine Economy Update, 11.26.2009
By Randell Tiongson on November 27th, 2009
- 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.
