Date:
March 2003
GDP and Export Growths Expected Despite War
The
government's main economic planning agency
has again expressed optimism that under a
"worst-case" scenario the Philippine
economy would still grow by around 4.2 percent
this year and could even expand by up to 5.2
percent should the war in the Middle East
end briefly (a scenario that is looking increasingly
unlikely).
Last week, we pointed out that despite the
official optimism over the macro-economic
figures, at the micro level, there remained
a number of causes for concern. Yet National
Economic and Development Authority (NEDA)
director-general Romulo Neri has again predicted
that the country's gross domestic product
(GDP) would post a 4.2 to 5.2 percent annual
growth this year, with a result tending toward
the higher end of the target more likely.
Neri blamed the poor showing of the currency
and equities markets in previous weeks to
unwarranted speculation of market players
over uncertainties in the Middle East situation.
The peso dropped to a low of 55.2 against
the US dollar at one stage this month while
the phisix, the main index at the local bourse,
breached the psychological support level of
1,000 prior to the start of the war on March
19. Both the peso and the phisix have gained
value over the past week.
Neri said that in his assessment, the Middle
East war would have more positive than negative
effects on the Philippines economy. He did
not say how he made the assessment or if the
welfare of the 1.5 million Filipino workers
in the Middle East was factored into his equation.
Meanwhile, the Philippine Exporters Confederation
Inc. (Philexport) said it is expecting that
Philippine outbound shipments would increase
by 6 to 11 percent YoY in 2003 despite the
Iraq war. Philexport President Sergio Ortiz-Luis
Jr. expressed his optimism that the country's
shipments to the United States might even
improve this year following a two-year decline
to meet the higher demand for electronic inputs
of the US military.
To prove his point, he said that the 45 percent
surge in imports in January points to an increase
in manufacturing activities in the succeeding
months. Export-oriented enterprises in the
country import a large bulk of their raw materials.
Perhaps, but we believe the jury is still
out on this point.
Like the NEDA chief, the Philexport president
also based his optimism on a quick victory
for the United States in its war against Iraq.
Around 30 percent of Philippine exports go
to the US.
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