Philippine Equity Partners: Steady growth recorded in 3Q08 pre-dates the crisis

Philippine Equity Partners (PEPI) provided the following analysis on the Philippine Economy recently:

Highlights:

• Gross Domestic Product grew 4.6% YoY in 3Q08, s ame as in 1H08. This is at the top end of the forecast range of economic planners and appears better than the mixed growth picture one may get from looking at various indicators of economic activity like electricity sales, fuel consumption, retail sales, external trade, remittances, bank lending, etc.
• We should point out however that 3Q08 still largely pre -dates the carnage in the global financial sector.
• On a seasonally adjusted basis, GDP growth slowed to 0.9% QoQ in 3Q08, from 1.9% QoQ in 2Q08.
• In 3Q08, government spending clearly accelerated, growing 12.5% in 3Q08 compared to a decline of 1.9% in 1H08. Industry also reported much stronger rates of growth vis -à-vis agriculture and services.
• Looking forward, we expect government spending growth to remain buoyant but exports, private consumption, and investment spending are all seen to slow.
• The current pace of growth is in-line with revised estimates we published in late October. We are maintaining our FY08 GDP growth forecast of 4.3%, which implies 4Q08 GDP growth of 3.6%. We are also maintaining our FY09 GDP growth estimate of 3.1%, which implies that the economy may grow at its slowest rate since 2001.