RP to grow by 3.2% this year - Congress body

MANILA, Philippines - The Philippine economy, as measured by gross domestic product (GDP), may grow by only 3.2 percent this year due to the impact of the global financial turmoil, the Congressional Planning and Budget Department (CPBD) said in a report to members of the House of Representatives.

CPBD, the think-tank of the House of Representatives, said the economy may just grow anywhere between 3.2 percent and 4.1 percent this year, slower than the government’s revised projection of 3.7 percent to 4.4 percent.

The government’s previous GDP growth forecast range for this year is 3.7 percent to 4.7 percent.

The Congressional office, however said that while its GDP forecast for 2009 is lower than the government’s projections, it is more optimistic than what was given by multilateral lenders.

The World Bank expects the Philippine economy to grow by just three percent this year while the International Monetary Fund (IMF) sees just a 2.25 percent growth.

In coming up with its GDP forecast for 2009, CBPD took into account growth in the services sector.

“On the supply side, the services sector will still lead GDP expansion with 4.2 percent to 4.5 percent growth. The industry and agriculture, forestry and fishery sectors are estimated to grow by 1.9 percent to 3.3 percent and 3.2 percent and four percent, respectively,” CPBD said in the report signed by director-general Rodolfo Vicerra.

Furthermore, the think-tank said that on the demand side, tightening of credit is expected to post a slower growth of 3.7 percent to 4.2 percent.

“Government spending is expected to grow by six percent to eight percent to mitigate the impact of the crisis,” it said.

However, CPBD said that concern over developments in the financial markets and the global economic crisis will dampen investor confidence.

In terms of exports, CBPD expects the industry to grow between 3.1 percent and 2.9 percent. It expects imports to contract by 1.3 percent but may grow to as much as three percent in case of an early economic turnaround.

CPBD urged the government to fully implement its planned P330-billion economic stimulus program, with major emphasis on infrastructure and industry development.

“The micro and small and medium enterprises (SME) sector should be given utmost attention as it provides the greatest number of employment opportunities,” CPBD said.

Last year, the Philippine economy expanded by 4.6 percent from 2007’s 7.1 percent, its highest in three decades. The agriculture sector grew by 3.2 percent last year and this is expected to improve by three percent to 3.6 percent. Services is also seen to take a hit as its growth forecast is between 3.8 percent and 4.5 percent from last year’s 4.9 percent.