The government has similarly downscaled its economic growth targets for 2009 after revising downwards its growth forecast for 2008, as soaring food and oil prices are likely to cap growth over the next three years.
After announcing the gross domestic product (GDP) growth slowed to 5.2 percent in the first quarter, the government now expects the economy to grow 6.2-to-7 percent from a previous forecast of 6.4-to-7.1 percent.
On the other hand, the government expects the economy to grow at a faster pace of 6.8- -to-7.6 percent in 2010 from a previous forecast of 6.7-to-7.5 percent.
This as the Development Budget Coordination Committee (DBCC) has approved the country’s economic growth targets for 2008-2010.
“Given recent and regional trends, the DBCC reviewed the macroeconomic assumptions over the medium-term period and agreed to set real GDP growth rates for 2008 to 2010 at 5.7-to-6.5 percent, 6.2-to-7 percent and 6.8-to-7.6 percent, respectively, “DBCC chairman and Budget and Management Secretary Rolando Andaya Jr. said.
Andaya said that there had been only a slight downsizing in the government’s original growth targets for the medium-term as an offshoot of the prevailing uncertainty in the world economy.
Furthermore, he said the revised growth targets were brought about by accelerating worldwide inflation given higher food prices and the record-high and more volatile Dubai crude oil prices caused by supply and demand concerns.
He also cited the strong peso, which the government expects to stay within the 42-45 to the dollar range, and lower export shipments amid slowing global demand.
The DBCC also expects merchandise exports to grow at a slower rate of six percent this year and next year before increasing by eight percent in 2010. Imports likewise are projected to increase by seven percent in 2008 and 2009 and by nine percent in 2010.
“The government is bent on balancing the budget by 2010 to enable the government to sustain the much needed infrastructure and social programs in the next two years to provide for more jobs and poverty alleviation measures in the face of tougher external conditions,” Andaya said.
He also said the Finance Department remains committed to its P1.2-trillion revenue target in 2008 to ensure that there are enough resources to cover the programmed spending for this year and the coming years.
The government has said it will spend more this year to help the poor cope with surging food and fuel costs, and that the aim of a balanced budget for 2008 has been pushed back for 2010.