Growth to slow slightly

REPORT FROM BUSINESSWORLD The Asian Development Bank (ADB) on Thrusday said the country’s economic performance as measured by gross domestic product would grow by 5% in 2006 from 5.1% last year due to uncertainty in agriculture production and low output for the industry sector. The bank’s projection, stated in its Asian Development Outlook 2006, was even lower compared to the World Bank’s earlier forecast of 5.3% and the government’s projection of 5.5%-6.2%. In a press conference at the bank’s headquarters, Jesus Felipe, ADB senior economist, said the agriculture sector, which has a 19% output share, would only grow by about 2%-3%, while industry, which contributes 25%, is expected to grow by 4%-5%. The government sees agriculture growing by 3.5%-4%, while industry would grow between 5.4% and 6.2%. "The immediate prospect for agriculture is uncertain because of the La Niña phenomenon, which brings torrential rains that may reduce crop production this year," the ADB report said. Mr. Felipe said the industry sector is dependent on foreign investments, but the negative perception on the country’s stability abroad may stymie near-term prospects. On the other hand, the National Economic and Development Authority (NEDA) said ADB has been consistently conservative on the country’s performance. In a separate interview, NEDA Director-General Romulo L. Neri, who stood pat on the official growth projections, said, "The analysis of ADO is a bit superficial. The World Bank estimates tend to be too low and ADB has always underestimated the Philippines consistently." For his part, Thomas Crouch, ADB country director, said in the same outlook briefing that their estimate is based on certain assumptions which, if achieved, would mean a higher growth rate. "The main point is not to concentrate too much on the numbers that we give but to look at how we backed that number up." In its outlook, the ADB said the country’s annual growth would average at between 5% and 6% until 2010 with "a modest rebound for agriculture for 2007." It said medium-term growth would be propelled by remittances from the overseas workers. The government said the central bank is projecting remittances to reach about $13.5 billion this year, which is higher by 10% from 2005. The ADB said agriculture would continue to be the main growth driver on the supply side assuming there are no major weather disturbances that will affect crop production. - Paolo Joseph L. Lising/BusinessWorld