World Bank sees PH economy growing by 5-5.4% By Michelle Remo
In its latest publication, “Global Economic Prospects 2011,” the World Bank has set its growth forecast for the Philippines for this year and next at a range of 5 to 5.4 percent. This is slower than its 6.8 percent growth projection for the Philippines for 2010. “Crucial to this projection is the assumption that strong investor confidence, manifested in strong private investments and (favorable) consumer sentiment surveys, would be sustained by the government’s efforts to step up reforms in governance and to improve overall investment climate,” Eric Lee Borgne, senior economist of the World Bank for the Philippines, said during the launch of the publication on Thursday. The World Bank expressed confidence that domestic investments would sustain this year the rare increase seen last year. Also, the multilateral institution expects remittances to continue growing in 2011, which will fuel the growth in household consumption. The World Bank sees robust expansion of the business process outsourcing industry as foreign direct investments in this sector are seen to continue coming in. The latest government report showed the Philippines growing by 7.5 percent in the first three quarters of 2010 over the year-ago level. This was the fastest seen in three decades and was driven partly by remittance-fueled consumption, government spending and domestic investments. The growth last year was a sharp acceleration from the 1.1 percent increase registered in 2009. A peculiar driver in 2010 was domestic investments, or fixed capital formation, which registered an 18.2 percent growth in the first three quarters. Government spending last year, however, was unusually high because of the national elections.
Central bank Governor Amando M. Tetangco, Jr. pointed to increased investor sentiment as behind the result, which was far greater than $402.2-million net inflow recorded in the comparable 2009 period. The tally accounts for flows of "hot money" -- funds which can be easily invested or pulled out of a country -- as of Dec. 24, the BSP data showed. A net inflow of $388.02 million was posted in 2009. The BSP expects the 2010 tally to hit $2.9 billion. Gross inflows for the period amounted to $12.848 billion, more than twice the $6.284 billion a year earlier. Gross outflows hit $8.245 billion, up from $5.882 billion. Foreign funds have been flooding emerging markets due to continued weakness in western countries. "The hefty rise in portfolio inflows is really due to improved investor sentiment towards the Philippines," Mr. Tetangco said in a text message. "As [countries like the Philippines]... continue to outperform advanced economies, it is reasonable to expect that more flows will find their way to emerging market economies." -- L. D. Desiderio |
Stocks in U.S. Decline as Jobless Claims Data Overshadow Earnings Optimism U.S. stocks fell, sending benchmark indexes lower for the first time in three days, as jobless claims climbed more than economists estimated and concern about a slowdown in Chinese demand dragged down commodity producers. Alcoa Inc. and ConocoPhillips dropped at least 2.1 percent following a decline in commodities prices after the World Bank said Chinamay raise interest rates further. Merck & Co. slid 6.6 percent, the biggest drop in the Dow Jones Industrial Average, as a trial for a blood-thinner drug was halted. Bank of America Corp. fell 1.5 percent after the lender was removed from Citigroup Inc.’s “Top Picks Live” list. The Standard & Poor’s 500 Index retreated 0.2 percent to 1,283.76 at 4 p.m. in New York after yesterday rising to the highest since August 2008. The Dow average decreased 23.54 points, or 0.2 percent, to 11,731.90. The difference between 2- and 30-year yields widened to a record as investors demand higher compensation against inflation as the economic recovery gains traction. Treasuries pared earlier gains after the bonds sold today yielded 4.515 percent, higher than the average forecast in a Bloomberg News survey of the Fed’s 18 primary dealers. “It’s the Fed that’s buying the market,” said Thomas Tucci, head of U.S. government bond trading at Royal Bank of Canada’s RBC Capital Markets unit in New York, which as a primary dealer trades directly with the central bank. “In December, the dealer community had securities on their books that are now gone.” The yield on the 30-year bond declined four basis points, or 0.04 percentage point, to 4.49 percent at 5:26 p.m. in New York, according to BGCantor Market Data. It dropped as much as seven basis points in the hour before the auction, then erased the decline before falling again. The price of the 4.25 percent security due in November 2040 rose 21/32, or $6.56 per $1,000 face amount, to 96. Ten-year yields slid seven basis points to 3.30 percent, and two-year yields fell two basis points to 0.58 percent. |
Crude Oil Falls From Highest Level in 27 Months as Jobless Claims Increase Crude oil fell from the highest level in 27 months as a bigger-than-forecast increase in U.S. jobless claims signaled that demand will be slow to rebound. Oil dropped 0.5 percent after the number of first-time claims for unemployment insurance payments jumped to the highest level since October in a Labor Department report. Demand for petroleum products has tumbled 8.2 percent in the past two weeks, according to the Energy Department. “The jobless claims are making people marginally bearish,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. Oil for February delivery fell 46 cents to settle at $91.40 a barrel on the New York Mercantile Exchange. Yesterday, futures closed at $91.86, the highest level since Oct. 3, 2008. Prices have risen 15 percent in the past year. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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