Economic managers paint bleak scenario

Government has drawn up a worst case scenario of low growth, high inflation and a huge budget deficit next year, if the current political uncertainty remains unresolved.

This was revealed yesterday by Economic Planning Secretary Felipe Medalla who painted a bleak scenario for the country if the political problem is not solved soon.

Medalla said that a worst case scenario would mean a mere growth of two percent next year, an average inflation rate of eight percent and a budget deficit as high as P100 billion.

Medalla blamed continuing calls for President Estrada to resign as a factor in the market’s loss of confidence in the economy. He singled out the Makati Business Club for being "undemocratic." He also commented that "there were statements made by certain parties that there will be turmoil if the President does not resign or is not impeached. I think they are doing a great disservice to the country."

Medalla, however, remains confident that the government is still on track with its growth targets for this year.

He projected that gross national product (GNP) and gross domestic product (GDP) for the third quarter will post a positive growth GDP, Medalla said, could still hit four percent allowing GNP to post a growth of between the target range of 4.5 percent and 5.5 percent.

Medalla assured that the economy is not yet about to go into a recession. "I don’t see the ugly head of recession yet," he said.

Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura agreed that even on a worst case scenario the country would still be able to post a low growth of two percent. "It’s bad, but it is not a recession," Buenaventura assured. – Marianne Go