【金融时报】Economy contracts in the Philippines

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Economy contracts in the Philippines
http://www.ft.com/cms/s/0/9204f66e-4b51-11de-b827-00144feabdc0.html

By Roel Landingin in Manila
Published: May 28 2009 07:37 | Last updated: May 29 2009 01:42

The Philippines – until now a rare example of economic growth in the global downturn – reported an unexpected contraction for the first quarter and revised downward positive figures from earlier periods, as the government faced the prospect of recession.

Government statisticians reported that gross domestic product fell 2.3 per cent from the fourth quarter and grew a slim 0.4 per cent from a year before, well below the official forecast of 1.8-2.8 per cent growth.

The figures are a blow to Gloria Macapagal Arroyo, the president, whose government had expected the economy to grow by 3.1-4.1 per cent this year, following economic stimulus measures and strong remittances.

Romulo Virola, the government’s chief statistician, said the Philippines “is now teetering into recession”. Leading economic indicators have turned negative and are pointing to possible further contraction in the second quarter, he added.

“The data are obviously disappointing,” said Frederic Neumann, regional economist at HSBC in Hong Kong. “The Philippines was meant to hold up rather well amid the global crisis.”

Compounding Thursday’s shock were revisions to past quarters’ figures. Sequential growth for the fourth quarter of 2008 was revised from 1 per cent to 0.3 per cent.

Nikhilesh Bhattacharyya, an associate economist with research firm Moody’s Economy.com, said the earlier forecasts of resilient growth lulled government planners into complacency.

“Policymakers took their foot off the stimulus accelerator,” he said in a research note. “Monetary policy rate cuts were tempered, while the government ... did not announce any new spending measures.”

He now forecasts the economy will probably contract by more than 1 per cent this year.

“Unemployment and poverty are most likely rising at a rapid pace and government spending needs to rapidly expand to reduce the output gap,” he said.

Apart from weak government spending, a sharp decline in the growth of personal consumption, which accounts for almost two-thirds of GDP, also pushed the economy toward contraction, economists said. Consumption grew only 0.8 per cent in the first quarter from a year ago, down from 5.1 per cent in the same period in 2008.

After the figures were released, the central bank trimmed benchmark interest rates by a quarter of a percentage point, its fifth rate cut since December.

Ralph Recto, government chief economic planner, said officials were taking steps to implement a 330bn peso ($7bn) fiscal stimulus programme that had been held up by a three-month congressional delay in passing the annual budget.