Economy to grow by as much as 4% this year - Villegas

MANILA, Philippines - A top economist has forecast Philippine economic growth to expand by as much as four percent this year and a further six percent in 2010, powered by higher remittances, consumer spending and infrastructure projects ahead of the national elections next year.

University of Asia and Pacific (UAP) senior vice president Dr. Bernardo M. Villegas said they earlier predicted gross domestic product (GDP) to grow 2.5 percent this year and four percent in 2010.

Villegas said to be able to ensure growth this year and carry that over to 2010, the country must look to increasing growth activities for domestic tourism, medical tourism and retirement villages.

He also called for further expansion in the areas of mining and energy investments to keep the economy competitive while reducing foreign currency losses due to increased reliance on indigenous energy sources.

However, Villegas said economic recovery this year and next will be threatened by higher government deficit, slowdown in exports and consumer spending.

The National Government has downscaled its growth forecast to 2.5 percent this year after a mere 0.4 percent growth reported in the first three months of 2009.

The Asian Development Bank (ADB) also placed growth at 2.5 percent this year and 3.5 percent in 2010. The International Monetary Fund (IMF) has lowered it to 2.25 percent.

The World Bank, meanwhile, expected growth at just 1.9 percent this year after the first quarter numbers were released while investment bank UBS projected GDP growth at 1.8 percent.

Meanwhile, Villegas forecast inflation to end 2009 at 3.3 percent, slightly moving upwards to four percent next year.

The Philippine peso is expected to weaken at 49.50 to the dollar this year and slip some more next year to 51.50.

“Investments will weaker by 10 percent this year but rebound by 3.5 percent in 2010,” he added.