Foreign financial institutions see RP economy improving this year

January 29, 2010 11:14 pm 

MANILA, Jan. 29 — Foreign financial institutions project a 3 percent growth or better for the Philippine economy this year, significantly better than the 0.9 percent growth last year.

Director Dennis Arroyo of the National Economic and Development Authority (NEDA) said the projection dovetails with the forecast made by the country’s economic managers, which is between 2.6 percent and 3.6 percent.

The International Monetary Fund (IMF) and the World Bank (WB) see the country growing by 3.1 percent and 3.5 percent, respectively. The United Nations’ Economic and Social Commission for Asia and the Pacific (ESCAP) projects a 3.5 percent growth. Even more bullish are the Development Bank of Singapore and New York-based think tank Global Source, which see the economy growing by 4.8 percent and four percent, respectively.

The NEDA economist points to several drivers of growth.

One, the Arroyo government remains committed to its Economic Resiliency Program (ERP) or stimulus program aimed at cushioning the impact of the global financial crisis on the most vulnerable sectors of the country. As a result, increased expenditures in government construction and services, coupled with the May national elections, are expected.

Last year, government spent P330 billion for ERP. This year, government is targeting to spend anywhere from P100 billion to P300 billion.

Two, double-digit growth is expected in sectors such as business process outsourcing (BPO), mining, and tourism. The Philippines is now the second largest BPO destination next to India.

Benefiting from “sustained world price increases in metals,” the mining industry grew by 21 percent last year. Domestic tourism, which was bolstered by the President’s “holiday economics,” rose by 21 percent in the first nine months of 2009.

Three, strong remittances from overseas Filipinos will push up retail and wholesale trade as well as the capital and property markets.

Arroyo, however, cautioned the economy may be adversely affected by the El Nino phenomenon, which may put pressure on food prices. In particular, Arroyo said the widespread drought in India may force upwards rice prices in the global market. The Philippines is the major buyer of rice in the world market.

Also affecting the economy this year is the 2009 budget deficit. While the official data will be released only next month, the deficit is expected to go “over the target ceiling of P250 billion,” because of government’s stimulus program, on the one hand, and government’s lower revenue collection base, on the other hand. (PNA)



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