FMIC and UA&P expect 2% GDP growth rate in 3rd quarter

The Philippine economy is projected to grow by 2 percent in the third quarter of the 2009, according to FMIC and UA&P Capital Markets Research.

“We expect a more robust export demand and early election spending to boost GDP by 4.2 percent in the fourth quarter and lead to a full-year average of 2.2 percent,” the report said.

Year-on-year headline inflation would average 0.3 percent in the third quarter but may rise to a benign 2.5 percent in the fourth quarter, “as we do not think crude oil prices will make a major upward move for the rest of the year,” said FMIC and UA&P.

Given the resiliency of overseas Filipino workers’ (OFW) dollar remittances in the first seven months, highlighted by an impressive 9.3 percent jump in July, FMIC and UA&P has revised upward its forecast for the whole year to a positive 3.5 percent growth.

Exports may significantly recover only by the fourth quarter and the full-year decline may now reach 20 percent.

With net foreign investment still expected to be nega­tive for the fourth quarter, the peso should retain a depreciation bias, subject to seasonal appreciation in November and De­cember.

While tax revenues of the fiscal sector remain the weak­est link in the macro-economy, FMIC and UA&P expect economic managers will clamp down on spending in December so as to achieve close to the P250 billion revised deficit.