MANILA, Philippines - Despite numerous indications that the United States economy would start to recover and post positive growth in the third quarter of this year, the country’s economic managers prefer to remain conservative with their growth targets.
Acting National Economic and Development Authority Director General Rolando Tungpalan, in a briefing at Malacañang, reiterated that there are strong indications that the worst is over as far as the global financial crisis is concerned.
He said that the government’s growth target for this year in terms of gross domestic product would remain in the range of 3.1 to 4.1 percent.
Citing the statements made by individuals such as US Federal Reserve Chairman Ben Bernanke, billionaire businessman Warren Buffet and Nobel Prize winner Paul Krugman about the worst being over, Tungpalan said that these reflect the growing optimism over the US economy and the global financial crisis in general.
During last week’s Cabinet meeting held in Cebu, the growing optimism was also shared by President Arroyo and her economic managers.
The change in the outlook on the global financial crisis prompted the President to make a symbolic gesture by changing the name of the Global Recession Impact Monitoring (GRIM) to Global Recession Impact News (GRIN).
“That shows the change in tone at how we are looking at the picture,” Tungpalan said.
However, Tungpalan said that the government would rather not be too excited over the expected recovery of the US economy even though this would definitely have a positive impact on the Philippine economy.
Tungpalan noted that exports to the US represent 18 to 20 percent of the total pie and the contraction has become less pronounced than it was months before.
From an average of 40 percent month-on-month, Tungpalan said that the contraction in exports to the US is now at 30 percent.
“The US market is still a big market for our exports, both services as well as goods. So, therefore, this gives an additional strength and resiliency to the Philippine economy,” Tungpalan said.
Even the overseas Filipino workers’ remittances, which were expected to decline significantly because of the global financial crisis, remained steady and even registered at an all-time high of $1.47 billion in March.
Tungpalan pointed out that the remittances should be around $4 billion every quarter and so the government could very well hit its target of $16 billion this year in spite of the poor economic conditions around the world.
He said that the government’s growth target for this year in terms of gross domestic product would remain at the range of 3.1 to 4.1 percent.
“Talking about adjustment at this early stage, while to borrow the term used by Bernanke ‘green shoots are showing’, it might be better to be very conservative,” Tungpalan said.
“Somebody said we might be breeding complacency. On the contrary, we are sticking to a 3.1-4.1 percent GDP growth for this year, notwithstanding inflation easing at 4.8 percent in April, against 8.3 percent last year,” he added.
“We will adjust as we see better signs but it is not good to react every time there are developments because the market is still volatile,” he said.