The Philippine economy likely reported modest growth in the second quarter from a year ago, supported by strong farm output, but the central bank said on Thursday that the scope for interest rate increases has narrowed. Socio-economic planning Secretary Cayetano Paderanga told reporters the economy likely grew between 4.5 percent and 5.5 percent in the second quarter from a year ago, supported by strong farm output, but a slowdown in the global economy may weigh on full-year domestic growth.
Assistant central bank governor Cyd Amador said on Thursday the scope for raising interest rates has narrowed, with the US Federal Reserve committed to keep interest rates near zero for at least two more years to support the world's largest economy. Manila is banking on plans to accelerate spending in the second half to lift overall growth this year, but July budget data shows state expenditures were still below year-ago levels. The government would adjust its full-year growth target of 7-8 percent this year after the release of official Q2 GDP data on August 31 and given concerns over the pace of growth in the global economy, Paderanga said.
The Development Budget Co-ordination Committee which sets the government's macro-economic targets, "will probably review the macroeconomic programme for the rest of the year in view of the actual numbers for the first half and also considering the changing global economic environment," Paderanga said. The government has assumed a slower growth of around 5 percent in its national budget this year, and economists in a Reuters poll in July predicted growth in 2011 will slow to 5 percent from 7.6 percent last year.
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