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THE
Pacific Economic Cooperation Council (PECC) has revised
its growth forecasts for the Philippines for this year
in response to the global economic slowdown.
The
council revised gross domestic product (GDP) growth to
6.3 percent, lower than the 7.2 percent reached last
year, saying this was mainly due to its lower growth
forecast for the
United States,
which is now seen to grow by only 1 percent in 2008.
However,
the PECC remained optimistic about the economic
prospects in 2009 and said the Philippines may even hit
7.1 percent on the back of the recovery of its export
markets, particularly the US, which is seen to grow by
2.3 percent.
“The
knock-on effects of the slowdown in the US economy and
the turmoil in the financial market are seen in downward
revisions for growth in most Asia-Pacific economies,”
said PECC in its First Quarter Update of the Economic
Outlook of its State of the Region Report.
As for
the peso-dollar exchange rate, the PECC forecasts the
peso to be at P41.58 to a dollar this year and P41.86 to
the greenback next year.
In terms
of gross national product (GNP), the PECC projects
private consumption expenditure to contribute 4.7
percent; private domestic investment, 1.5 percent;
government spending, 0.5; and net exports, -0.2 percent.
The
numbers become slightly better next year with private
expenditure expected to rise faintly to 4.8 percent, but
private investment will drop with only a growth of 0.4
percent against the 1.5 percent this year, and
government spending will rise from the negative depth of
-0.2 percent to a positive 0.2 percent on the back of
exports seen to contribute 1.9 percent to GNP.
The
Philippines is seen to post a 2.3-percent growth in
exports this year and register a double-digit growth of
11.9 percent in 2009.
PECC
forecasts continued high oil and food prices that would
drive annual average inflation up to 5 percent in 2008
and 5.6 percent in 2009. The Philippines is among the
countries seen to experience the most rise in inflation
this year.
Inflation in Southeast Asia would hit 6.2 percent in
2008 and 4.6 percent in 2009, according to the council.
This will mainly be driven by high inflation in China
and Indonesia and countries like the Philippines and
Singapore.
“China
is not alone in struggling with price pressures. In
Southeast Asia CPI inflation is set to almost double
from 3.2 percent in 2007 to 6.2 percent this year.
Indonesia has already been mentioned but [the] same
holds [true] for the Philippines and Singapore.”
“The
period of strong growth with very low inflation has come
to an end. Even with appreciating currencies,
Asia-Pacific economies are starting to feel the pinch of
higher energy and commodity prices. The recent spike in
food prices has not helped. Indeed, it has exacerbated
the adverse impact on vulnerable groups who spend a high
proportion of their incomes on rice and other staples,”
said Yuen Pau Woo, coordinator of the PECC’s State of
the Region Report and president of the Asia-Pacific
Foundation of Canada, in a statement.
PECC’s
first-quarter economic outlook update projects 3.7
percent real GDP growth for the Asia-Pacific region in
2008, a substantial downward revision from the
4.9-percent forecast in November 2007, due to growing
pessimism about the United States economy. The region is
expected as a whole to bounce back in 2009 with growth
at 4.4 percent.
“We
expect the fiscal-stimulus package to have a positive
effect on the US economy, even though it will taper off
by late 2008. If the fall in housing prices does not
abate by the end of the year, or if there are other big
surprises in financial sector writedowns, the risk of a
further downward spiral becomes very real. The risks to
our forecasts are higher than they have been for a
decade,” said Woo.
PECC is
an independent nongovernment international organization
committed to the promotion of cooperation and dialogue
in the Asia- Pacific. |
