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Philippines - The Manila Times - Govt Raises Growth Forecast for This Year Print E-mail

Monday, December 17, 2007

Govt raises growth forecast for this year

By Darwin G. Amojelar, Reporter

PHILIPPINE economic managers cut their economic targets starting next year until the end of President Gloria Arroyo’s term owing to rising oil prices and the rapid appreciation of peso, the National Economic and Development Authority (NEDA) said.

Socioeconomic Planning Secretary and NEDA Director General Augusto B. Santos said in a telephone interview that the Development and Budget Coordinating Committee (DBCC) however raised this year’s economic growth forecast from the earlier projection of from 6.1 percent to 6.7 percent.

“The emerging actual figure for this year is 6.9 percent to 7.3 percent,” Santos said.

He said the DBCC adjusted upwards the growth target this year because of the strong performance in the first three quarters. In the first nine months, the economy, as measured by the country’s gross domestic product (GDP), grew 7.1 percent, the highest in more than two decades.

For next year, the economy is likely to grow at a slower pace or between 6.3 percent and 7 percent because of costlier crude and a stronger peso, which dampens exports growth. The DBCC earlier forecast next year’s GDP growing between 6.2 percent and 6.8 percent.

For 2009 and 2010, GDP is projected to rise between 6.4 percent and 7.1 percent and between 6.7 percent and 7.5 percent, respectively.

Gross national product, which is a wider measure of economic performance as it includes net factor income from abroad, is seen to grow at a faster range of between 7.2 percent and 8 percent next year, 7.5 percent and 8.2 percent in 2009, and 7.9 percent and 8.6 percent in 2010. 

The DBCC has assumed the peso to average 42 to 45 to the dollar next year until 2010. Under its existing program, the inter-agency body forecast the exchange rate to range from 46 to 48 for every dollar this year and between 45 and 47 next year.

For oil, economic managers expect Dubai crude to cost $80 to $90 a barrel this year until 2010, higher than the DBCC’s program of $61 to $64 this year and $62 to $70 next year.

Due to costlier oil, consumer price increases could pick up within a range of 3 percent to 4 percent next year, and between 3.4 percent and 3.6 percent for 2009 and 2010.

 For this year, the DBCC forecast inflation to range from 2.6 percent to 3.1 percent, lower than its earlier projection of 3.3 percent to 3.8 percent.

Due to a stronger peso, the DBCC also projected exports to grow 8 percent next year and in 2009, before climbing 10 percent in 2010. Imports however are seen growing at a faster pace of nine percent next year and in 2009 and 11 percent in 2010.

The government’s revision was timely as companies across the country normally schedule their planning sessions in the last quarter of the year, and base their sales and profit projections on forecasts of key macroeconomic indicators.

(Source: The Manila Times, 2007)

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