Standard Chartered revised up 2011 economic growth forecast for the Philippines to 5.7 percent

Economy: British-owned Standard Chartered Bank revised upwards its 2011 economic growth forecast for the Philippines to 5.7 percent from the original 5.4 percent.

In a research note, Standard Chartered economist Vincent Tsui said the investment bank raised the country’s GDP growth forecast to 5.7 percent instead of 5.4 percent this year due to the projected strong investment inflows in the second half.

“In anticipation of more broad-based and sustainable growth dynamics ahead, we raise our 2011 GDP forecast to 5.7 percent from 5.4 percent previously. We expect growth momentum to pick up in the second half,” he stressed.

Tsui said the investment bank raised its GDP growth forecast for the third quarter of the year to 6.4 percent instead of six percent but lowered its growth forecast in the fourth quarter to 6.8 percent instead of seven percent.

“We expect the strong investment pipeline to remain a key growth driver in the coming quarters. While we expect headline GDP growth to slow further in the second quarter due to the high base effect and temporary disruptions to electronics manufacturing from the Japan earthquake, the underlying  fundamentals of the economy remain solid. We believe headline GDP growth is set for a strong rebound in second half,” Tsui added.

He pointed out that the growth in the second half would be fuelled by investments instead of consumer spending.

“Near-term weakness aside, we believe the shift from consumer spending to business investment as the Philippines’ key growth driver deserves more market attention,” Tsui added.

The National Statistical Coordination Board (NSCB) reported late last month that the country’s GDP growth slowed down to 4.9 percent in the first quarter of the year from the revised 8.4 percent in the same period last year due to weaker government spending and slow global trade. The National Economic and Development Authority (NEDA) was expecting a growth of between 4.8 percent and 5.8 percent for the first quarter.

“Even so, we believe the weaker headline numbers mask underlying strength in an economy that is now driven by more sustainable and balanced growth dynamics,” the economist said.

The sharp drop in government spending in the first quarter of the year helped the Aquino administration post a budget surplus of P61 billion in the first four months of the year, a complete reversal of the P131.6 billion budget deficit booked in the first four months of last year.

“This is in line with our expectation that this year’s budget deficit will narrow to P256 billion due to fiscal prudence and stronger tax collection on the back of buoyant domestic demand,” Tsui said.

The Aquino administration hopes to trim the budget deficit to P300 billion or 3.2 percent of GDP this year from a record level of P314.5 billion or 3.7 percent of GDP last year. It has committed to trim the deficit to two percent of GDP starting 2013 until the end of the term of President Aquino on 2016.

Standard Chartered reported that inventory restocking particularly of durable equipment resulted to a sharp 37 percent rise in gross capital formation in the first quarter of the year reflecting the booming investment activity in the country.

It added that remittances from overseas Filipino workers (OFWs) remained strong despite the tensions in the Middle East and North African (MENA) states as well as the disaster in Japan while foreign direct investments (FDIs) would pick up later this year in light of the public private partnership (PPP) scheme of the Aquino government.

“The launch of 10 infrastructure projects this year as part of the government’s PPP initiative is also expected to attract $1 billion of FDI inflows and support construction-related sectors,” Tsui explained.

Tsui said the investment bank sees the country’s GDP expanding by six percent in 2012 and 2013.

The Philippines posted its strongest growth in 34 years after its GDP expanded by 7.6 percent last year exceeding the revised growth forecast of five percent to six percent set by economic managers. It was on the verge of a recession when its GDP growth slowed down to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis.

The Cabinet-level Development Budget Coordination Committee (DBCC) has set a GDP growth target of between seven percent and eight percent this year and next year.

Bangko Sentral Governor Amando Tetangco Jr. said the country’s GDP would grow slower than expected this year as the economic growth targets were set by the DBCC prior to the tensions in the MENA region and the disasters in Japan.

“We think the economy will continue to grow this year. The government is projecting seven percent to eight percent although that projection was arrived at prior to the events at the MENA region as well as the earthquake, the tsunami and the nuclear disaster in Japan,” Tetangco said earlier.

 

Continue reading

Philippines- Spratlys within West Philippine Sea of 200 Nautical Mile EEZ UNCLOS

The Department of Foreign Affairs (DFA) spokesperson prefers to describe a portion in the disputed Spratlys claimed to be within the country’s maritime jurisdiction as the “West Philippine Sea” instead of lumping it in the general tag “South China Sea.”

This was “in keeping with our tradition and history, as well as reflective of its proper geographic location,” Assistant Foreign Secretary Ed Malaya told the Inquirer last week

On May 31, the DFA used the term in a statement seeking clarification from the Chinese embassy on “recent sightings of a China Marine Surveillance Vessel and other People’s Liberation Army Navy ships at the vicinity of the Iroquois Bank in the West Philippine Sea.”

The same waters, Malaya said, “have long been called Dagat Luzon, or Luzon Sea by our fisherfolk and the rest of our people, and referred to as such in published maps since time immemorial after the major Philippine island of Luzon.”

“On the other hand, South China Sea in Chinese is simply South Sea, while for the Vietnamese it is East Sea,” he said.

Economic zone

“The Iroquois Bank is located southwest of Recto (Reed) Bank and east of Patag Island, and is well within the Philippines’ 200-nautical mile exclusive economic zone,” the DFA’s May 31 statement said.

Patag Island, or Flat Island, is one of nine geological features in the Kalayaan Island Group (KIG), which the Philippine government claims ownership. It is part of the Spratlys, one of the three island groups in the South China Sea.

The other eight islands, islets or reefs in the KIG being occupied by Philippine troops are Pag-asa (Thitu), Lawak (Nanshan), Likas (West York), Parola (Northeast Cay), Panata (Lankiam), Kota (Loaita), Rizal (Commodore Reef) and Balagtas (Irving Reef).

The legal basis of the country’s claim to the KIG is stated in Presidential Decree No. 1596, issued on June 11, 1978, by then President Ferdinand Marcos.

Manila’s claim was based on a “theory that the islets are adjacent or contiguous to the main Philippine islands; that this region is vital to the country’s security and economic survival; that the islets were abandoned after World War II, and that the recent (Philippine) occupation of some of the islets gives it title, either through discovery or prescriptive acquisition. The Philippines further based its claim on continental shelf extension.”

UN convention

Last week, Malaya called on China and other Spratlys claimant-countries to “follow Unclos,” or the United Nations Convention on the Law of the Sea.

Unclos “says when you own an island, you own its adjacent waters,” said Malaya, who was recently appointed as the Philippine ambassador to Malaysia.

A senior Philippine diplomat also has disputed Beijing’s claim that some of its vessels were merely conducting normal maritime research activities in disputed areas in the South China Sea.

“Scientific marine research in another country’s exclusive economic zone is allowed only after prior notice and consent. However, no such request (from China) has been received,” said the diplomat, who asked not to be named.

The diplomat cited PD 1599, also issued on June 11, 1978, which established the country’s exclusive economic zone up to a distance of 200 nautical miles. The decree bans exploration in the area in the absence of an agreement.

 

Continue reading

Philippines accuses Communist China of 'serious violations' in the West Philippine Sea (South China Sea)

The United Nations Convention on the Law of the Sea (UNCLOS) shows the light Blue Dotted line as 200 Nautical Mile Economic Zone for the Philippines, Vietnam, Brunei, Malaysia and Indonesia. The Blue dotted line includes most part of the Kalayaan Island Group (Spratly) of the Philippines. UNCLOS did not show any China’s territory in the West Philippines Sea. The Philippines recorded already 6 invasion by china to the West Philippine Sea As of June 3, 2011.

The Philippines has accused China of “serious violations” in the South China Sea following at least six aggressive acts in the disputed territory, raising worries Beijing may be fortifying its claims in the potentially oil-rich region.

The Department of Foreign Affairs said it had filed a protest before the Chinese Embassy “over the increasing presence and activities of Chinese vessels including naval assets in the West Philippine Sea (South China Sea).”

China’s actions “hamper the normal and legitimate fishing activities of the Filipino fishermen in the area and undermines the peace and stability of the region,” the DFA said.

The Philippine military has reported that a Chinese surveillance vessel and navy ships were seen unloading building materials and erecting posts in the vicinity of Iroquois Reef and Amy Douglas Bank – an uninhabited undersea hill claimed by the Philippines about 230 kilometers from southwestern Palawan province.

It is part of the Spratlys but well within the Philippines’ 200-mile exclusive economic zone, the DFA said.

The DFA said the diplomatic protest follows a series of protests it filed since March, after two Chinese vessels harassed a Philippine exploration ship at Reed Bank, prompting the Philippine military to send war planes and Coast Guard ships to the area.

Last month, Chinese jet fighters had reportedly intruded into Philippine airspace also in the vicinity of Reed Bank, part of the Kalayaan group of islands in the Spratlys that the Philippines claims.

“The actions of the Chinese vessels in Philippine waters are serious violations of Philippine sovereignty and maritime jurisdiction and also violate the Asean-China Declaration of Conduct on the South China Sea,” the DFA said.

President Benigno Aquino III on Thursday said that the Philippines was planning to file a protest at the UN for the series of incursions.

“There are six or seven [incursions] happening after February 25. We are completing all the necessary data and then we will present it to them [China] and then file it with the appropriate body, which is the UN,” he said.

Those acts included the reported firing last February by a suspected Chinese naval vessel to scare away Filipino fishermen from Quirino, or the Jackson Atoll, in a Spratlys area claimed by Manila, said officials, who spoke anonymously because of the sensitivity of the subject.

The Chinese Embassy in Manila said the “the reported ‘incursion of Chinese ships’ is not true.” But, it acknowledged the presence there of a Chinese marine research ship “conducting normal maritime research activities in the South China Sea.”

The DFA said both Manila and Beijing agreed to “keep the channels of communication open and continue dialogue on the South China Sea issue.”

 

Continue reading