THE National Economic and Development Authority (NEDA) forecast stronger growth in the last quarter of 2003 and next year, pointing to healthier trading environment in 2004.
At the recently concluded PortCalls Cargo Economics Conference, NEDA assistant director for National Planning and Policy Staff Scholastica Cororaton said gross domestic product (GDP) is expected to range from 3.8% to 4.3% in the third quarter of the year, and 4.2% for the full year. Next year, GDP growth will be from 4.9% to 5.8%, she added.
The country will also benefit from “firmer recovery taking place in the US and Japan, while Europe has began to come out of its decline. Asian economies are also recovering from the impact of Severe Acute Respiratory Syndrome (SARS),” she explained.
However, Cororaton noted exports to the US market have eroded and shifted to the ASEAN-4 and China, a development that should be taken as positive considering it lessens the country’s overdependence on the economies of US and Japan.
From January to July, exports to the US posted a negative variance of 16%, while exports to Japan inched up by a meager 1.5%. Other Asian countries, meanwhile, continue to patronize Philippine exports, with Hong Kong, China and Malaysia in the lead.
Cororaton said while the electronics sector exhibited weak export growth in the early months of 2003, this is expected to pick up in the fourth quarter and will continue until 2004 as replacement of computers and wireless semi-conductors boost world demand for electronic products.
“Exports were weak in July to August. Total exports in dollar terms fell 2.2% in August as electronic products exports fell 7.1% following a similar worldwide trend,” she said.
Imports, on the other hand, remained healthy with a 6.4% expansion in the first seven months of the year, Cororaton said.
Growth is strong in consumption goods such as cars, motorcycles and finished agricultural products. However, semi-processed materials indicate growth at a slower pace, she added.
“If the situation continues until the fourth quarter, this would paint a rather bleak Christmas for our semiconductor exports, since our electronics industry relies a lot on imported inputs,” she said.The US and Japan, Cororaton noted, remain the top sources of imported products, mainly capital equipment. The fastest-growing import sources are still China and Malaysia. Of the traditional markets, only Japan managed to increase its exports to the Philippines.
“With lower imports of raw materials for electronics exports and with oil inventories built up during the US-Iraq war being drawn down, imports have also slackened. However, imports of capital goods are up 12% and this bodes well for future growth,” she stressed.
Cororaton disclosed certain macroeconomic indcators are encouraging and supportive of stronger growth in the coming quarters. The fiscal deficit, inflation rate and treasury bill rates are lower than the low end of the forecast.
“The exchange rate has started to stabilize while our international reserves are higher than the full-year target,” she said.