The economy may have grown at its slowest pace in seven years in 2008, dragged down by high inflation and the impact of the global economic downturn, the National Economic and Development Authority (NEDA) said yesterday.
Dennis Arroyo, head of the policy planning office at the economic planning agency, told reporters that the economy expanded 4.2 percent to 4.5 percent last year, after hitting a more than three-decade peak of 7.2 percent in 2007.
The low end of the government’s annual growth forecast was the slowest since 2001, when the economy grew just 1.8 percent.
“The slowdown is due to two crises, the oil and food crisis which hit the Philippines in the first half, and the global recession in the last quarter,” Arroyo said.
Arroyo also said the robust Christmas sales in December failed to boost fourth quarter growth because of higher oil prices and inflation during the period.
He also said the 4.6-percent third quarter growth could be revised downward to 4.4 percent.
“Prices of oil and rice were too high during the first half and the third quarter, and then later on, we saw more of the effects of the global financial crisis,” Arroyo said.
NEDA expects growth of the agriculture, fishery and forestry sector to fall within the range of 3.1 to 3.3 percent; industry, 4.8 to 5.1 percent; and services, 4.3 to 4.5 percent.
Arroyo said given the dismal economic outlook, the government needs to pump-prime the economy to meet the GDP target for the year of 3.7 percent to 4.7 percent.
“There’s the economic resiliency package so we’re pushing for infrastructure projects this year,” Arroyo said.
The official GDP numbers are set to be released on Jan. 29, the same day the Bangko Sentral ng Pilipinas (BSP) announces its monetary policy decision.
Economic output in the fourth quarter of 2008 likely slowed to 3.6 to 4.4 percent from a year ago because of a broad-based slowdown in the economy, Arroyo said.
The government had set a 4.1-to 4.8-growth target for 2008, and it had forecast a 4.6-percent expansion in gross domestic product in the fourth quarter on hopes that brisk Christmas spending and lower inflation would underpin consumption.
Annual inflation hit its slowest pace in nine months in December at eight percent, after reaching a near 17-year peak of 12.5 percent in August, due to a sharp drop in food and fuel prices.
Socio-economic planning chief Ralph Recto said earlier this month the country could hit the high end of its 3.7-to 4.7-percent growth target this year if a P330-billion fiscal stimulus package was implemented on time.
Philippine officials want to frontloand spending in the first half of the year to protect the economy from the ravages of the global economic crisis, which is expected to depress exports and sour remittances from Filipinos working abroad.
The Senate yesterday ratified the P1.415-trillion 2009 national budget, paving the way for its signing into law. The House of Representatives ratified it Wednesday night.
“We need to get our infrastructure projects going,” Arroyo noted.
Aside from pump-priming the economy, Arroyo said there is a need to help retrenched overseas Filipino workers find other markets.
“There’s going to be rapid deployment of OFWs,” he said.
Arroyo said there are other markets such as South Australia, New Zealand and Bulgaria.