SARS forces government to review its growth targets this year

The dreaded Severe Acute Respiratory Syndrome (SARS) has forced the Development Budget Coordinating Council (DBCC) to take another look at its economic growth projections as well as other macroeconomic assumptions.

Finance Secretary Jose Isidro N. Camacho said yesterday the DBCC will have to re-assess national projections and determine whether the assumptions are still attainable as the virus has started showing signs of derailing the country’s economic performance.

In particular, the inter-agency committee will review the impact of a sharp drop in business activity happening in regional trading partners like Hong Kong, China and even Singapore and its impact on the country’s export performance.

"We have to assess whether our expectations and the domestic economy will be affected," Camacho said.

The DBCC recently slashed the government’s export growth target for this year from the original 10 percent to between five percent and eight percent due to the Middle East conflict.

Gross domestic product (GDP) is expected to expand between 4.2 percent and 5.2 percent for this year.

Camacho, however, expressed his confidence that the domestic economy may not be heavily affected by the effects of SARS considering that the percentage contribution of intra-regional trade to the economy "is less than 10 percent."

"The country achieved a 3.3 percent GDP growth in 2001 despite the negative effect of the Sept. 11 terrorists bombings in the United States," he pointed out.

Camacho also said the country could take advantage of increased tourist traffic as many vacationers canceled their trips to Hong Kong or Singapore for fear of contracting the deadly virus.

"There are windfalls. We might become favored destination," he said, adding that "a boom in domestic tourism could indicate that other sectors of the economy like the services would perform favorably as well."