Government maintains 2.6%-3.6% growth target

MANILA, Philippines - The government is maintaining its 2.6- to 3.6-percent growth projection for 2010 despite the expected negative impact of the El Niño weather phenomenon.

Acting Socioeconomic Planning Secretary and NEDA Director General Augusto Santos said the 2010 growth projection, approved by the interagency Development Budget Coordination Committee (DBCC) last year, already took into account the possible damage from El Niño.

Analysts have been urging the government to slash its 2010 growth projection, saying that the El Niño phenomenon is expected to dampen agriculture output and cut overall economic growth this year.

However, Santos said the growth projection “has already factored in the possible damage of prolonged drought to the agriculture and the utilities particularly energy and water subsectors.”

Santos also said that the DBCC had already taken into account the possible reduction in employment in the affected sectors which could affect income and consumption of households.

The government is counting on the expected recovery of other sectors such as industry and services to drive growth this year.

“Notwithstanding the negative implications of El Niño, the projected growth for this year is anchored on the expected gradual recovery of both the industry and services sectors,” he added.

These sectors account for about 32 percent and 50 percent, respectively, of the total economy.

Santos said the conservative assumptions on the growth of these sectors took into consideration the adverse effects of possible power and water shortages, the fragile world economic recovery and the measures by government to mitigate the effects of prolonged drought. Such measures include the rehabilitation of existing irrigation facilities, water rationing to the most affected areas, the distribution of irrigation pumps and cloud seeding.

He also said that NEDA is closely coordinating with concerned agencies like the Department of Agriculture (DA), the Metropolitan Waterworks and Sewerage System (MWSS), the National Water Resources Board (NWRB), the National Irrigation Administration (NIA) and the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) as part of the government’s response to the problem.

“We engage in the timely exchange of information with them as they implement appropriate policies to lessen the impact of the drought,” the NEDA official said.

Santos said the government would continue to monitor the situation and review the macro assumptions if necessary.

“We will apprise the public and various stakeholders should there be a need to revise the growth target for the year,” Santos said.

Last year, the economy grew by 0.9 percent or within the 0.8 to 1.8 percent growth target for 2009.