THE country’s economic indicators point to the possibility that first-quarter growth will be better than expected and that the Philippines is on its way to recovery from the global crisis, the National Statistical Coordination Board (NSCB) said.

NSCB noted that after a six-quarter downward streak which started with the global financial crisis in the third quarter of 2008, the composite leading economic indicator (LEI) shifted direction in the first quarter of 2010, slightly improving to negative 0.470, from a revised negative 0.473 in the fourth quarter of 2009.

“While the descent of the index began to slow down as early as the third quarter of 2009, its directional shift in the first quarter of 2010 confirms the definitive recovery of the Philippine economy from the global crisis,” the NSCB said.

The NSCB generates the composite LEI as a one-quarter-ahead indicator of the overall direction of the economic activity for the country. The LEI makes use of 11 leading economic indicators that anticipate the changes in the direction of overall economic activity.

The 11 economic indicators, composed of both economic and financial variables, are stock price index, exchange rate, money supply, consumer price index, merchandise imports, tourist arrivals, terms of trade in new businesses, hotel occupancy, electric energy consumption, and wholesale price index.

Of the 11 economic indicators, seven were considered “positive contributors.” These are consumer price index, total merchandise imports, wholesale price index, foreign-exchange rate, hotel occupancy rate, number of new businesses and electric energy consumption.

“Although the number of positive contributors remained the same, their combined share increased to 51percent from only 34.1 percent in the fourth quarter of 2009,” said NSCB.

The negative contributors were stock price index, tourist arrivals, terms of trade index and money supply. The negative contributors accounted for 49 percent share of total contribution.

The contribution of the 11 indicators is measured through the combined effects of the direction of each of the indicators and the correlation of their components with that of the nonagriculture gross value added.

The LEI only measures the non-agricultural component of the gross domestic product (GDP) since agriculture follows a different cycle compared with GDP.

The Philippine Leading Economic Indicators System (LEIS) was developed jointly by the NSCB and the National Economic and Development Authority (Neda) in 1995 to serve as a basis for short-term forecasting of the macroeconomic activity in the country.

The results of the quarterly computation of LEI are inputs to the GDP forecasting work of the Neda and the Bangko Sentral ng Pilipinas (BSP). The National Planning and Policy Staff of the Neda uses the LEIS for benchmark GDP forecasting, while the BSP’s Department of Economic Statistics uses the composite LEI to generate a one-quarter-ahead forecast of GDP that is used by the Monetary Board in inflation targeting.