National Economic and Development Authority (NEDA) projects gross domestic product (GDP) to grow between 3.6 to 4.4 percent in the fourth quarter of last year as all sectors have weakened compared to 2007. Meanwhile, growth for 2008 is expected to be within 4.2 to 4.5 percent.
“This is a conservative forecast and it is good to be conservative right now,” NEDA National Policy and Planning Staff (NPPS) Director Dennis Arroyo said in a briefing, factoring in the effects of the global economic crisis. He sees however the full-year growth to be toward the higher end of the NEDA forecast.
By sector, Arroyo projects agriculture, fishery and forestry (AFF) to have grown 2.4-3.2 percent in the fourth quarter of 2008. Industry and Services are expected to be within 5.0-6.0 percent and 3.2-3.9 percent, respectively. For the whole of 2008, AFF, Industry and Services are projected to be within 3.1-3.3 percent, 4.8-5.1 percent and 4.3-4.5 percent, respectively.
Arroyo said the main growth driver would be the construction subsector which he sees to post the fastest growth among all industry subsectors mainly due to the accelerated spending of the government on public infrastructure. He added that private construction growth is also expected to remain high despite the dampening effect of high prices of construction materials such as steel.
“The construction subsector however could be partly negatively affected by the low level of confidence caused by the global economic crisis but strong demand is still expected for residential and office spaces with the growth in outsourcing, demand from overseas Filipinos and favorable terms for housing loans offered in the market,” Arroyo said.
Arroyo also said that one of the bright spots is real estate as strong demand from retail and mid-level markets and the outsourcing firms continues in the fourth quarter. “The availability of housing loans at competitive interest rates is also expected to contribute positively to the performance of the subsector,” he said.
Another bright spot is the private services sector which is seen to retain its good performance in the fourth quarter. Arroyo explained that business process outsourcing (BPO) was observed to be benefiting from the economic slowdown in industrial countries.
“The firms in these economies tend to consider outsourcing as a more efficient alternative for
this would allow them to save on cost,” he said. However, the NEDA-NPPS director cautioned that the downside risk in the private services subsector would be the nil growth in tourist arrivals and the lagging average hotel occupancy rate in the country.
He added that the transportation, communication and storage service subsector’s growth will be invigorated mainly by lower fuel prices. “Air transport is expected to grow positively with the liberalization of the industry and higher demand lured by air fare promotions and long holidays in December. The higher rail ridership in MRT, LRT and Megatren will also contribute positively to the performance of this subsector,” Arroyo said.