Congress body sees 4.3-4.8% growth

MANILA, Philippines - The economy is likely to grow anywhere from 4.3 percent to 4.8 percent this year, lower than the official growth assumption of five percent to six percent and the government’s aspirational target of seven percent to eight percent, a government think-tank said in its latest report on the economy.

The Congressional Policy and Budget Research Department (CPBRD) said the underspending and underinvestment by the Aquino administration has dragged down economic growth and are likely to derail the achievement of the targets for this year and in 2012.

The CPBRD said that with dim economic growth prospects this year, the government would have to grow by at least 7.8 percent in the next four years to be able to achieve the low-end of the government’s 2011 to 2016 growth target of seven percent to eight percent.

 “The delay in the achievement of the annual seven percent to eight percent target that is required to achieve inclusive means that the economy would have to grow at a higher level in the succeeding years to catch up,” CPBRD said.

The think-tank said that because of uncertainties in the global economy, the role of the government in stimulating the economy is crucial.

 “Since inclusive growth requires job creation, economic authorities should consider bringing back employment targets in the macroeconomic assumptions to serve as suasion on the government agencies to ensure that policies, programs and projects are geared towards contributing to the achievement of employment-related objectives,” CPBRD said.

The think-tank also said that the government should not use different economic growth assumptions for budget planning because it affects development objectives.

 “Resources and goals must be in sync. Apart from the issue of government underspending, adequacy of resources to finance programs and projects may also constrain economic growth. A higher growth target would need higher budgetary support,” CPBRD said.

The government used a five-percent to six-percent growth assumption for the 2011 budget but has an aspirational economic growth target of seven percent to eight percent for the year.

 “Even if Congress deems that a higher budget is needed to support the growth target, it cannot appropriate a higher budget than what was submitted by the Executive. Thus, it is incumbent on the Executive to submit to Congress a realistic budget that would facilitate the achievement of growth targets,” CPBRD said.