RP seen to be laggard in Asean in 2003

The Philippines will lag behind the rest of Southeast Asia this year as the Arroyo administration’s bloated budget deficit has forced it to lay out an economic plan that would not support its expansion target.

The regional economic forecast released by the Singapore-based Nomura Research Institute indicates that the Philippines would grow by 3.6 percent this year.

This projection is only slightly higher than the 3.5-percent forecast of the International Monetary Fund and 4.2 to 5.2 percent of the Arroyo administration.

According to Nomura, compared to the rest of the region, the Philippines faces "considerable long-term fiscal problems."

The government’s economic plan for 2002, Nomura said, was only moderately expansionary and this year, the program laid out is neutral at best since it cannot support growth-oriented spending due to its runaway deficit.

According to Nomura, private consumption is expected to grow by only 3.1 percent this year while public consumption will decline by 1.1 percent as the government reins in expenditures to control its deficit.

Real gross national product, on the other hand, is projected to grow by 3.8 percent as Nomura expects a 6.8-percent growth in net factor income from abroad, comprised mainly of dollar remittances from overseas Filipino workers.

On the whole, the institute said ASEAN economies are on a recovery mode. "Although the region was facing a slowdown which would likely to persist during the first half of 2003, the economies are expected to accelerate from the second half," Nomura said.

Nomura said growth in the region would be paced by Malaysia which is projected to grow by 4.9 percent, followed by Thailand with a projected growth of 4.7 percent.

The growth of the Malaysian and Thai economies, according to Nomura, would be followed by a 3.9-percent growth in Singapore and the expected 3.7-percent growth by Indonesia.

Beyond the economic performance of the original five nations of the Association of Southeast Asian Nations, Nomura said China would loom large and formidable with its economy expected to grow by 7.5 percent.

Although China would slow down from its eight percent growth in 2002, Nomura said its 2003 performance would still be strongest in Asia as its giant economy continues to gear up towards liberalization.

The other three major economies in Asia would likewise slowdown, with Japan hitting another year of recession and declining by 0.1 percent, followed by Korea whose economy was expected to slow down from 6.1 percent last year to 5.6 percent this year.

Taiwan was also expected to slow down from 3.3 percent last year to this year's 2.9 percent while Hong Kong is expected to grow by 2.5 percent compared to its 1.9-percent growth last year.