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WHILE
the government maintains that the low end of its
macroeconomic targets will not be threatened, the
National Economic and Development Authority (Neda) said
that a possible downward revision of targets will
possibly be undertaken by September.
Neda
Acting Director General Augusto Santos said if
conditions persist, the 5.7 percent low end of the
government’s gross domestic product (GDP) target will
still be achievable.
However,
if there is a sharp increase in inflation or if the
general economic environment turns for the worst, Santos
said a revision may be done by the third quarter.
“The
5.7-percent low end [growth target] will not be
threatened. At the very least, we will manage to hit the
low end. [As for revisions], at this point in time, no
[revisions will be forthcoming]. But things are [rapidly
changing]. If the trend is really sharp, we will have no
choice but to adjust targets,” Santos said during a
press conference.
Santos
said the second-quarter growth may be the same as the
first quarter when the country posted a GDP growth of
5.2 percent. He expects a slowdown in the third quarter
and a GDP growth increase by the fourth quarter.
Previously, Neda National Planning and Policy Staff (NPPS)
officer in charge Myrna Asuncion said the country needs
to grow by around 6 percent in the third and fourth
quarters to meet the government’s GDP targets.
Growth
this year will especially be cut by high inflation.
Santos said on Tuesday that inflation is now projected
to increase to around 7percent to 9 percent or, if the
food and energy crises worsen, could go beyond 9 percent
and hit double-digit by year-end.
The Neda
said that in coming up with the 7 percent to 9 percent
projection for inflation, the agency used the annual
average of Dubai crude prices of between $115 to $125
per barrel. The Neda-NPPS stated that as of July 7,
2008, Dubai crude already averaged $113 per barrel.
Meanwhile, Neda simulations approximate that a 1-percent
increase in transportation fares will result in an
increase in inflation of 0.017 percentage points. This
means that the recently approved increase in jeepney
fares to 8.50 already represents a 10- percent increase
and, consequently, a 0.17-percent increase in inflation.
The Neda
also said that if the peso depreciates by 1 percent,
inflation will increase by 0.15 percentage points, while
a 1-percent increase in oil prices will correspond to a
0.067-percentage-point increase in inflation.
Despite
the possible effects of high inflation on consumer
spending, Santos said the possibility that another wage
hike will be implemented has not yet been discussed.
However, he assured that the tripartite wage boards are
closely monitoring the situation.
Santos
said, on the other hand, that if another increase in
transportation fares will be implemented, this would
significantly affect inflation in the next few months. |
