Domingo projects 6.5% GDP growth this year

MANILA, Philippines - The economy may grow at a slower pace of 6.5 percent this year as inflation picks up and the local currency depreciates, a trade official said.

“(My forecast) is at the lower end of the range which is 6.5 percent,” Trade Secretary Gregory Domingo told reporters on the sidelines of the 17th Outstanding Filipino Retailers and Shopping Centers of the Year.

The economy grew 7.2 percent in 2013.

Domingo noted that the higher inflation rate and weaker peso would have a negative effect on this year’s economic growth rate.

“The GDP (gross domestic product) number is a real GDP number. It is inflation adjusted. Since forecast of inflation is slightly higher, it will have an effect,” he said.

Bangko Sentral ng Pilipinas Governor Amando Tetangco, Jr. said earlier the inflation rate is forecast to average 4.3 percent this year, within the three to five percent target range.

The inflation forecast for this year is higher than the three percent average recorded in 2013.

“Remember also that our currency has depreciated. Since it’s in dollar terms, that will also have negative impact,” Domingo said.

He said the recovery of electronic exports however, may offset the impact of the higher inflation rate and weaker local currency may have on this year’s economic growth performance.

“When it (electronics exports) recovers, I think it will have more than 10-percent growth,” he said.