Economic slowdown seen this year

The Estrada administration is projecting a slight slowdown in gross domestic product (GDP) from last year’s four to 4.2 percent to three to 3.5 percent this year mainly because of external factors.

Budget Secretary Benjamin Diokno said the economy’s performance will depend on the following assumptions: The impact of the El Niño on food prices in the second semester; world oil prices at $22 per barrel in January to $26 per barrel by yearend and an exchange rate stabilizing at a yearend level of P47.50 to $1.

Diokno also said the Philippine economy will also depend on the performance of the US economy under the Bush administration (and its policies on interest rates, stocks etc.) plus the effects of the El Niño on agriculture this year. Even with the El Niño agricultural production is expected to register a positive growth of 1.7 percent which though slightly lower than last year’s two percent and 1999’s six percent, "is still on the positive side."

He said the expected result of the impeachment trial by Feb. 12 will be an acquittal since the numbers required to convict the President are simply not there.

But whatever the outcome, he said, the sooner the people accept the verdict and work together as a nation, the better for the economy.

Diokno said government still anticipates the economy to be resilient in 2001 because: 1. The "young" population and overseas Filipino workers’ remittances will boost private consumption, which is expected to grow by at least 2.7 percent; 2. export growth will remain respectable given the 101-percent growth in investments at the Philippine Export Zone Authority, specifically at ecozones. Exports will grow by 7.2 percent in volume; and 3. the construction sector will post zero, not flat, growth after a three-year contraction. And with the May 2001 elections, public spending will be significantly boosted.

Private consumption is projected at 2.7 to 2.9 percent (from last year’s three percent); government consumption at 0.2 to 0.4 percent (from last year’s one percent); investments at-3.2 percent to -1.7 percent (from -3.6 percent); exports at 7.2 to 7.6 percent (from last year’s 10.8 percent) and imports at four to 4.5 percent (from last year’s -7.5 percent).

Documents furnished by Diokno showed that PEZA investments in domestic enterprises reached P32.96 billion in 1999 and this grew to P66.54 billion or by 101.9 percent in 2000 (the bulk of which was in expansion projects).

Domestic enterprise/facilities/utilities and services registered by PEZA also increased from P3.86 billion in 1999 to P7.51 billion, or by 94.6 percent. Total ecozone locator investments thus grew from P36.82 billion to P74.05 billion or by 101.1 percent, the documents said.

As of December 2000, the country’s gross international reserves dropped by -0.6 percent or from $15.07 billion from January to September 1999 to $15.02 billion for the same period in 2000.