Philippines: Economic growth likely to slow in the fourth quarter
December 20, 2010
The Leading Economic Indicator (LEI), which constitutes the basis for short-term forecasting of macroeconomic activity in the country and is published by the National Statistics Coordination Board (NSCB), continued to rise in the fourth quarter, although at a slower pace than in the first half of 2010. The increase from a revised 0.022 points in the third quarter to 0.026 points in the fourth represented the fifth consecutive quarter of growth in economic activity. Official data for the fourth quarter GDP will be available on 31 January. Six of the eleven components of the LEI were positive, in particular, tourist arrivals and the number of new businesses. On the other hand, the wholesale price index and terms of trade index contributed negatively to the LEI. The slower expansion of the LEI suggests that the economy will likely decelerate in the last quarter of 2010 after posting robust GDP growth of 6.5% in the third quarter. Nevertheless, the full-year growth figure is expected to exceed the 5.0%-6.0% growth target set for 2010 by the National Economic Development Authority (NEDA). For 2011, economic growth is likely to moderate due to the absence of election-related government spending, which was an important driver of economic growth in 2010.