Gov’t retains macro targets but lowers export, import projections

MANILA, Philippines - The government has retained most of its economic forecasts for this year and next year but downscaled growth projections for exports and imports for 2014 due to lingering uncertainties in advanced economies led by the US.

The interagency Development Budget Coordination Committee, which sets the country’s macroeconomic assumptions, has slashed its growth target for exports to six percent from the original forecast of 11 percent.

Imports are now expected to grow by five percent from 13 percent.

Socio-Economic Planning Secretary Arsenio Balicasan said the downward revision was made after taking into account latest indicators of demand and changes in computing the balance of payments (BOP).

The BOP is a systematic record of a country’s total payments to foreign countries including the price of imports and the outflow of capital and gold.  Transactions are either marked as a credit or a debit.

The growth in exports is critical because of revenues from this sector which is one of the main engines of growth in addition to foreign investments.

The Philippines is a key part of the region’s electronics export chain as it provides about 10 percent of the world’s semiconductor manufacturing services, including for mobile phone chips and microprocessors.

The country’s exports amounted to $40.05 billion in the first nine months of the year, 0.1 percent lower than the same period a year ago due to weak global demand. Exports of electronic products fell 10 percent to $15.8 billion during the nine-month period.

The electronics industry expects exports of the sector to decline by 10 to 12 percent this year compared with an earlier forecast of five to six percent growth.

Philippine imports, on the other hand, remained flat at $46.4 billion in the first nine months.  The country’s largest imports are inputs used by the semiconductor and electronics industry.

Balicasan said that while Super Typhoon Yolanda that devastated the central Philippines could slow the country’s economic growth in the fourth quarter, the government’s full-year forecast of six to seven percent is still attainable.

Meanwhile, Budget and Management Secretary Florencio “Butch”Abad said the government is also keeping its two percent deficit to GDP (gross domestic product) target for 2014 given its strong fiscal position and improving tax collections.

Abad said there is room to accommodate expenses for post-Yolanda reconstruction without incurring a higher deficit.

The country had a budget shortfall of P101.1 billion as of September, which is less than half of its P238 billion deficit target this year.

The government’s initial estimates point to a reconstruction cost of as much as P250 billion which is expected to take as long as 10 years.