Neda: 7-8% growth ‘still our fighting target’ Momentum seen in ’10 may carry over to 1st quarter MANILA, Philippines—Having taken into account the impact of recent world events, the National Economic and Development Authority (Neda) believes that the Philippines may yet post decent growth comparable to that seen in the first quarter of last year. “There’s still a possibility of positive growth because we had strong momentum from the fourth quarter of 2010,” Economic PlanningSecretary Cayetano W. Paderanga Jr. on Monday said in a phone interview. “Remember, it was already March 11 when disaster struck Japan, and the Mena [Middle East and North Africa] crisis was not really that bad until the latter part of February.” Paderanga noted that export figures for the early part of the first quarter were “good.” The country’s gross domestic product (GDP) grew 7.8 percent in the first quarter of 2010. Election spending spurred growth during the period. According to Paderanga, Neda is still in the process of completing a report on economic activity in the first quarter of 2011. The GDP report for the first quarter is set to be released on or before May 30. Economic managers are now monitoring the inflationary impact of oil price hikes brought on by the political turmoil in the Middle East and North Africa. The crisis in parts of the Arab world, Paderanga said, could have a longer lasting impact on “key variables” than the recent earthquake and tsunami in Japan. Before these events, the Philippines was benefiting from strong momentum coming out of 2010, especially given the growth experienced in the fourth quarter, Paderanga said. But in March 2011, the Philippines may find it “difficult” to post 7-8 percent economic growth, but that level is “still our fighting target,” Paderanga said. Economists have welcomed the government’s decision to stick to its growth target since it signals its determination to meet its goals despite the difficulties. Changing targets as soon as disturbances strike would not encourage the business sector and ordinary Filipinos to be more productive and rally behind the targets, said Dr. Arsenio M. Balisacan, dean and professor of the University of the Philippines School of Economics. Economists also agreed that the escalating tension in parts of the Arab world and the resulting speculations that may lead to higher oil prices present more sustained risks to economic expansion. Pricier fuel, they said, would eat up income margins for exporters, burdening industries with more expensive logistics. It all leads to higher food prices and erodes the purchasing power of consumers, said Dr. Rolando Dy, executive director of the Center for Food and Agribusiness University of Asia and the Pacific. Japan’s economy is also expected to recover quickly because of the Japanese people’s resilience, discipline and unity, economists said. An annual economic growth of 7-8 percent and the achievement of the Millennium Development Goals (MDGs) are among the key targets of the Philippine Development Plan 2011-2016. In listing its key targets, the Philippines hopes to achieve “inclusive” 7-8 percent growth from 2011 to 2016, reduce poverty incidence to 16.6 percent in 2015 from 33.1 percent in 1991, and create employment by an annual average rate of 1 million jobs. Other key medium-term goals are: 100 percent participation of school-age children in primary education; 1:1 ratio of girls to boys in primary education and 50-percent share of women in non-agricultural wage employment; 26.7 under-five mortality per 1,000 live births; 52 maternal mortality per 100,000 live births; zero prevalence of malaria and tuberculosis. "If there is going to be a study regarding the oil deregulation law, there should be a more ‘exciting’ penalty structure...if (the oil firm can] gain by a P1 million, [the] penalty should be times 100," Energy Secretary Jose Rene D. Almendras told reporters in Malacañan Palace. Fuel price hikes announced last week have been criticized by Mr. Almendras, who said monitoring by the Energy department showed the adjustments were more than what was warranted. Several oil firms have since implemented rollbacks in their pump prices. "We want every single oil importation in the country reported to DoE (Department of Energy), with penalties if you don’t do it within a certain point in time; we want to restrict ports of importation so that we can solve both the data [monitoring] and also the smuggling -- that’s one batch of steps to...improve the oil deregulation law," the Energy chief said. Last Tuesday, Pilipinas Shell Petroleum Corp., Chevron Philippines, Inc. and Total (Philippines) Corp. increased pump prices of regular gasoline by P0.70/liter, diesel by P0.25/liter, kerosene by P0.40/liter and unleaded gasoline by P0.60/liter, citing higher world prices. Chevron rolled back its prices a day after, pointing to market forces, while yesterday Shell said it was cutting diesel and kerosene prices by P0.40/liter. The oil firm’s regular gasoline price, however, will be increased by P0.25/liter. Seaoil Philippines, Inc. said it would be implementing the same adjustments announced by Shell. Mr. Almendras said an Energy and Justice department (DoE-DoJ) task force -- which last week ordered concerned oil firms to explain the price hikes -- would determine if "pricing abuse" had been committed. Even if Chevron had rolled back its prices immediately, Mr. Almendras noted that these had "increased for a few hours, so kumita sila dun (so they earned from that)." "If we see a price at di mapaliwanag ang price na ’yon (and they cannot explain it), we can also take them to court in the same way that the DoJ-DoE task force can cite an oil company for the increase...the localities that showed an increase," Mr. Almendras said. "We are also asking the DoJ-DoE task force to determine whether may (there was) abuse or not." There is no specific "pricing abuse" provision in the Downstream Oil Deregulation Act (Republic Act 8479), but refusal to submit any reportorial requirement and other prohibited acts are punishable with a two-year jail term and a fine ranging from P250 to P500,000. Predatory pricing -- defined as selling or offering to sell any oil product at a price below the seller’s or offeror’s average variable cost for the purpose of destroying competition, eliminating a competitor or discouraging a potential competitor from entering the market -- and cartelization carry penalties of three to seven years in prison and a fine of P1 million to P2 million. Mr. Almendras was careful to say that the government was not looking to again regulate the oil industry. "As far as re-regulation is concerned, that’s the decision of the legislative branch. Should they decide to do it, then we will comply -- we will need a lot of money to do that -- but we will comply with whatever decision has to be made," he said. More immediately, the government is looking to provide a slate of mitigation measures to alleviate the pressure of continuous fuel price hikes, the first being the Public Transport Assistance Program to be implemented next week. The scheme’s implementing rules, said Mr. Almendras, "will be ready in time for May 2. The potential is Friday at the latest". Other measures to alleviate the impact of rising world crude prices -- due to factors such as continued unrest in the oil-producing Arab world -- will be discussed by economic managers tomorrow, he said. Oil firms have implemented 13 price increases since the start of the year. Only four price rollbacks have been announced in the same period. As of April 19, diesel prices ranged from P47.15-49.15/liter and gasoline was at P53.95-60.22/liter, the Energy department said. |
U.S. Stocks Fall on Retreat in Commodity Shares, Kimberly-Clark’s Forecast U.S. stocks fell, breaking a three- day winning streak for the Standard & Poor’s 500 Index, as lower commodity prices drove down energy and raw-material producers and Kimberly-Clark Corp. (KMB) cut its profit forecast. Marathon Oil Corp. (MRO) and Nucor Corp. (NUE) slumped as the Thomson Reuters/Jefferies CRB Index of commodities slipped 0.2 percent, the first drop in four days. Kimberly-Clark, the maker of Scott toilet paper and Huggies diapers, declined 2.7 percent to lead losses by consumer companies that sell necessities. Yahoo! Inc. climbed 1.5 percent following a report that board members may consider offers or other ideas to improve the company. The S&P 500 slipped 0.2 percent to 1,335.25 at 4 p.m. in New York. The Dow Jones Industrial Average declined 26.11 points, or 0.2 percent, to 12,479.88, retreating from the highest level since June 2008. “There’s enough to be concerned and cautious about in the market, but at the end of the day, we will be driven by corporate earnings, which need to continue to perform,” said Eric Mintz, who helps oversee about $5 billion at Eagle Asset Management in St. Petersburg,Florida. The S&P 500 rose last week to the highest level since Feb. 18 and the Dow climbed to an almost three-year high as earnings at companies from Apple Inc. (AAPL) to Morgan Stanley beat analyst estimates. S&P 500 profits are exceeding projections by 9.6 percent for the first quarter, according to data compiled by Bloomberg. The gauge has climbed 6.2 percent in 2011. |
| Crude Oil Extends Decline After Reaching 31-Month High as Equities Slide Oil fell in New York, extending yesterday’s decline after reaching a 31 month high, as a slide in U.S. equities raised concerns fuel demand will slump. Futures fell as much as 0.5 percent as investors reacted to the first drop in the Standard & Poor’s 500 Index in a week yesterday. U.S. crude inventories climbed 1.5 million barrels last week, according to the median estimate in a Bloomberg survey of analysts before a government report due tomorrow. Oil for June delivery fell as much as 47 cents to $111.75 a barrel on the New York Mercantile Exchange. It was at $111.77 at 7:26 a.m. Singapore time. The contract yesterday slipped 1 cent to settle at $112.28 after reaching $113.48, the highest since Sept. 22, 2008. Futures have risen 33 percent in the past year. Brent crude oil for June settlement yesterday fell 33 cents, or 0.3 percent, to $123.66 a barrel on the London-based ICE Futures Europe exchange. The contract was at a premium of $11.38 a barrel to New York futures settling in the same month. The premium shrank $2.54 from a week earlier as supplies fell at Cushing, Oklahoma. Inventories at the delivery point for West Texas Intermediate futures dropped 770,000 barrels to 41.1 million in the week ended April 15, the Energy Department said on April 21. National crude inventories fell 2.32 million barrels to 357 million, the first drop since February. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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