The Philippine economy likely expanded 1.8-2.8 percent in the first quarter from a year earlier, backed by modest growth in services, and the government is confident of hitting its full-year growth goal, the socio-economic planning chief said on Thursday.
Ralph Recto told reporters government pump-priming and sustained remittance flows from overseas Filipinos would support consumption and lift growth in the first quarter. Lower consumer prices, with the socio-economic planning office forecasting the annual inflation rate may hit zero percent in July or August, would also boost spending, making the government optimistic of achieving its 2009 growth target of 3.1-4.1 percent, he said.
"We expect it to be positive because of the pump priming of the government," Recto told reporters, regarding consumption. He said the services sector may have grown 3-4 percent in January to March from a year earlier, with the agricultural/forestry and industry sectors expanding 1.5-2.1 percent and 0.1-1.5 percent, respectively.
First quarter growth data will be announced on May 28, the same day that the central bank reviews monetary policy. The economy grew 4.6 percent in 2008. The Philippine central bank said earlier this week it was not yet ready to end its current rate easing cycle but was monitoring developments in economic activity locally and abroad.
The central bank has reduced its policy rates by a total 1.5 percentage points since December, with its key overnight borrowing rate now at a 17-year low of 4.5 percent. Recto said growth would likely be weakest in the first quarter, with spending picking up speed in the coming quarters supported by modest remittance flows.
The Philippines, one of the world's top five sources of migrant workers, expects remittances of Filipino workers to be flat this year at $16.4 billion. But the central bank said last week a slight growth was possible with the 25 percent rise in deployment of Filipino labourers in the first two months of the year.
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