CLSA sees RP growth at 3.9% this yr, 3.4% in 2009

Global investment bank CLSA expects the country’s economy growing by 3.9 percent this year and 3.4 percent in 2009, significantly below the government’s economic growth target range of 6.3 to seven percent.

Defending its pessimistic view on the Philippines,  CLSA said the country’s economic growth engines are  limited this year and next year.

“Philippine remittance inflows are more vulnerable than commonly thought. The bulk of overseas jobs are in pro-cyclical sectors and the US is still the destination for 50 percent of workers,” CLSA said, noting the negative impact of a US economic slowdown.

Dollars sent home by overseas Filipinos coursed through banks grew to $2.5 billion in the first two months of the year or 15.5 percent higher than the level recorded in the same period last year, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

Furthermore, CLSA said the spike in rice prices is a  major problem and that skyrocketing inflation also poses risk to the economy.

Because of the challenging economic landscape abroad, CLSA  believes that the government may miss its goal to balance the budget this year.

“We expect fiscal slippage this year,” CLSA noted.

Latest DOF data showed that the National Government incurred a budget deficit of P51.6 billion in the first quarter of the year or P400 million lower than the P52 billion deficit recorded in the same period last year and P8.7 billion lower than the programmed deficit of P60.2  billion for the period.

In March alone, the government posted a budget deficit of P18.6 billion, 44.2 percent lower than the P33.4 billion deficit recorded in the same month last year due to higher revenues and lower expenditures.