Exports, polls to drive first-quarter growth
02/03/2010 | 09:18 AM
A rebound in exports and spending related to the local and national polls in May are expected to push economic output growth past 2.6 percent in the first quarter, a government official said on Tuesday.
The faster gross domestic product (GDP) growth should be accompanied by higher revenue collection, in turn lessening pressure on government efforts to plug a massive budget deficit.
"I think [GDP growth] could be higher than 2.6 percent in the first quarter given the trajectory of export growth," Finance Undersecretary Gil S. Beltran told reporters.
GDP, the total value of goods and services produced by an economy, grew by just 0.6 percent in the first quarter of 2009.
With economic growth having accelerated to 1.8 percent in the fourth quarter, full-year growth stood at 0.9 percent, at the lower end of the government's 0.8-1.8 percent target.
Beltran's prognosis of first-quarter growth higher than 2.6 percent compares with this year's goal of 2.6-3.6 percent.
He noted that Philippine exports grew by 5.1 percent in November after 13 months of contraction that began in October 2008. The National Statistics Office (NSO) has reported that $3.69 billion worth of goods were shipped out in November from $3.51 billion a year earlier.
The NSO data also showed renewed demand for Philippine goods from key markets like the US, Japan, the Netherlands, Germany, Singapore, Korea and Thailand, as well as double-digit improvements in exports of electronic data processing and office equipment.
Election spending, Beltran said, would also help support the economy in the first quarter. And with higher economic growth, it would be possible for the full-year deficit to be lower than the programmed P293 billion.
Beltran noted that every 0.1 percentage point of growth is equivalent to P1.3 billion in additional revenues. The Arroyo government, however, is keeping the P293-billion deficit target for 2010, he said, adding that the next administration would have to decide whether to lower the goal.
The budget deficit swelled to P272.5 billion at the end of November due to poor revenues. The government expects the full-year shortfall to hit P290-298 billion.
Semiconductors and Electronic Industries in the Philippines, Inc. Chairman Arthur J. Young, Jr. told BusinessWorld he expects 10-15 percent growth for electronic exports.
"It could be higher than that if the demand we are seeing continues through the next few quarters," he said in a text message.
Demand, he said, is coming from countries like China, India, Korea and the US.
He said the market for smart phones, notebooks and netbooks, as well as portable and wireless products are growing globally.
But University of the Philippines economist Prof. Benjamin E. Diokno said export growth would not reduce the government's budget deficit.
"Exports don't pay taxes," said Diokno, who was Budget secretary during the Estrada administration. "I estimate the National Government deficit to be in the neighborhood of P320 billion," he said.
Tax collections, he added, would be stagnant or could even drop due to zero tariffs among the big ASEAN nations, as well as due to tax incentives given to personal retirement and real estate investments. — BusinessWorld
The faster gross domestic product (GDP) growth should be accompanied by higher revenue collection, in turn lessening pressure on government efforts to plug a massive budget deficit.
"I think [GDP growth] could be higher than 2.6 percent in the first quarter given the trajectory of export growth," Finance Undersecretary Gil S. Beltran told reporters.
GDP, the total value of goods and services produced by an economy, grew by just 0.6 percent in the first quarter of 2009.
With economic growth having accelerated to 1.8 percent in the fourth quarter, full-year growth stood at 0.9 percent, at the lower end of the government's 0.8-1.8 percent target.
Beltran's prognosis of first-quarter growth higher than 2.6 percent compares with this year's goal of 2.6-3.6 percent.
He noted that Philippine exports grew by 5.1 percent in November after 13 months of contraction that began in October 2008. The National Statistics Office (NSO) has reported that $3.69 billion worth of goods were shipped out in November from $3.51 billion a year earlier.
The NSO data also showed renewed demand for Philippine goods from key markets like the US, Japan, the Netherlands, Germany, Singapore, Korea and Thailand, as well as double-digit improvements in exports of electronic data processing and office equipment.
Election spending, Beltran said, would also help support the economy in the first quarter. And with higher economic growth, it would be possible for the full-year deficit to be lower than the programmed P293 billion.
Beltran noted that every 0.1 percentage point of growth is equivalent to P1.3 billion in additional revenues. The Arroyo government, however, is keeping the P293-billion deficit target for 2010, he said, adding that the next administration would have to decide whether to lower the goal.
The budget deficit swelled to P272.5 billion at the end of November due to poor revenues. The government expects the full-year shortfall to hit P290-298 billion.
Semiconductors and Electronic Industries in the Philippines, Inc. Chairman Arthur J. Young, Jr. told BusinessWorld he expects 10-15 percent growth for electronic exports.
"It could be higher than that if the demand we are seeing continues through the next few quarters," he said in a text message.
Demand, he said, is coming from countries like China, India, Korea and the US.
He said the market for smart phones, notebooks and netbooks, as well as portable and wireless products are growing globally.
But University of the Philippines economist Prof. Benjamin E. Diokno said export growth would not reduce the government's budget deficit.
"Exports don't pay taxes," said Diokno, who was Budget secretary during the Estrada administration. "I estimate the National Government deficit to be in the neighborhood of P320 billion," he said.
Tax collections, he added, would be stagnant or could even drop due to zero tariffs among the big ASEAN nations, as well as due to tax incentives given to personal retirement and real estate investments. — BusinessWorld
