Economy seen growing 4.8-5.9%

MANILA, Philippines - The Philippine economy, as measured by gross domestic product (GDP), could grow anywhere from 4.8 percent to 5.9 percent this year, the Congressional Policy and Budget Research Department (CPBRD) said yesterday.

The CPBRD’s latest projection, released yesterday, is slightly higher than its previous assumption of 4.6 percent to 5.7 percent for the year, taking into account the strong 6.4-percent growth of the economy in the first quarter of 2012.

The high end of the CPBRD’s forecast is within the government’s growth assumption for the year of five percent to six percent.

However, the think-tank of the House of Representatives said that while the economy started strong in the first quarter, challenges remain on the back of the crisis in Europe and the economic slowdown in the US.

“While the CPBRD is sanguine over economic prospects for 2012, the economy would continue to face the challenges of downside risks and global headwinds, as likewise noted in the pronouncements of multilateral institutions – Asian Development Bank, International Monetary Fund and the World Bank,” the CPBRD said in its report.

The ADB expects the Philippine economy to grow by 4.8 percent this year.

The IMF and the World Bank are less optimistic, projecting a GDP growth of 4.2 percent and four percent for 2012, respectively.

CPBRD said that the government has to sustain the growth momentum to help cushion the economy from external shocks. It warned that the government must be ready in case the crisis in the euro zone lingers.

“Sustaining the reform momentum is therefore essential to mitigate the economy’s vulnerability to turbulence and shocks — from the Euro zone debt crisis to the geopolitical dilemma with China. A concrete resolution to the Euro debt problems remains elusive,” the CPBRD said.

Furthermore, the think-tank warned that weak economic data on China could also affect the Philippines.

The CPBRD said economy growth in the Philippines is still far from inclusive because of structural problems such as poor and inadequate infrastructure in the country.

“Upgrading and modernizing the country’s infrastructure is crucial in addressing the key strategic objectives of improving competitiveness and alleviating poverty. Further, the government must provide the policy and legal framework that ensure predictability of rules and processes to reduce transaction costs and risks,” the CPBRD said.

It said that the increasing number of overseas Filipinos is a reflection that there is still not enough gainful opportunities in the country.