Gov't lowers growth targets for '11, '12

MANILA, Philippines - Economic managers of the Aquino government is looking at further lowering the economic growth forecast for this year and next year in light of the slower-than-expected domestic output in the first half of the year as well as the damages brought about by the series of natural calamities led by typhoons Pedring and Quiel, government documents showed.

Documents showed that the Cabinet-level Development Budget Coordination Committee (DBCC) is looking at lowering the gross domestic growth (GDP) forecast further to a range of 4.4 percent to 5.4 percent from the revised range of five percent to six percent for this year and to five percent to six percent instead of seven percent to eight percent for next year.

Originally, the DBCC penned a medium-term GDP growth target of seven percent to eight percent between 2011 and 2016.

However, the government used a five percent to six percent GDP growth assumption for its 2011 Budget of Expenditures and Sources of Financing (BESF) and 5.5 percent to 6.5 percent for its 2012 BESF.

The country’s GDP posted a slower-than-expected growth of four percent in the first half of the year from 8.7 percent in the same period last year due to weak global trade as well as underspending by the Aquino administration.

The Philippines posted its strongest GDP growth in 34 years after expanding by 7.6 percent last year. It was on the verge of a recession in 2009 after its GDP growth slackened to 1.1 percent from 3.8 percent in 2008 due to the full impact of the global financial crisis.

Factors that continue to affect economic growth in the Philippines include the economic uncertainties in advanced economies led by the US, the sovereign debt crisis in Europe, the political tensions in the Middle East and North African (MENA) states as well as the disasters in Japan last March.

The documents likewise showed that economic managers has lowered the growth targets for exports and imports this year and next year as a result of the weak global trade.

The government is set to lower the growth target of exports to five percent instead of nine percent this year and to 10 percent instead of 12 percent for next year. In terms of value, this would amount to $53.2 billion instead of $55.3 billion this year and to $58.6 billion instead of $62.5 billion next year.

It is also set to slash the growth target for imports to 13 percent instead of 17 percent this year and to 15 percent instead of 18 percent next year.In terms of value, this would amount to $69 billion instead of $71.5 billion this year and to $79.4 billion instead of $85.1 billion next year.

Latest data from the National Statistics Office (NSO) showed that merchandise exports climbed 3.3 percent to $29.18 billion in the first seven months of the year from $28.24 billion in the same period last year while imports grew at a faster double-digit rate of 14.3 percent to $35.5 billion from $31.06 billion.

President Aquino is opposing the plan to lower the growth target and is now looking at a P72 billion stimulus package topump prime the country’s ailing domestic output.