|
THE
absence of election spending, the strong peso and the
low investment rate of the government as it strives to
meet the target of balancing the budget will most likely
drag down the country’s economic performance in 2008,
according to government think tank Philippine Institute
for Development Studies (PIDS).
PIDS
president Josef Yap said the country may post a growth
of 5.9 percent in gross domestic product (GDP) in 2008.
He also projects gross national product (GNP) to weaken
to 6.4 percent.
Yap’s
GDP projection is even lower than that of the projection
of the Development Budget Coordination Committee (DBCC)
of 6.3 percent to 7 percent in 2008, and that of the
Ateneo Center for Economic Research and Development,
which estimates a GDP growth range of 6.2 percent to 7.2
percent this year.
“The
main reason would be the dissipation of the economic
stimulus provided by the May 2007 elections and the
government infrastructure program. Remittances from
overseas Filipinos will have a smaller impact, primarily
because of the appreciation of the peso. While it
remains an important consideration, the slowdown in
global economic growth will not be a significant
factor,” Yap said in the latest Development Research
News publication of the PIDS.
He said
the slowdown in the economy will be across the board but
the momentum generated by the 2007 growth will be enough
to maintain the 2008 GDP growth at 5.9 percent.
He said
services will continue to be the main driver of growth
in 2008 with a projected growth of 7.2 percent. Industry
will not be far behind, with a projected growth of 5.2
percent, while agriculture, fishery and forestry (AFF)
will grow by a modest 3.8 percent this year.
“The
services sector is expected to remain as the main driver
of economic growth, while manufacturing will continue to
struggle. The finance subsector will likely experience
less than double-digit growth after four consecutive
years due to unfavorable global conditions,” Yap said.
“Agriculture will continue to grow strongly at 3.8
percent as a result of the boost from infrastructure
spending in 2007,” he added.
Yap also
expects growth in personal consumption expenditure to
ease to 5.5 percent, while structural constraints will
not prevent investments from posting a moderate growth
of 6.5 percent since several government projects still
need to be completed, as reflected in the 10 percent
growth in construction value-added.
He also
expected inflation to be in the high end of the central
bank’s target of 3 percent to 5 percent.
Yap said average inflation in 2008 will be in the vicinity of 5
percent.
The
National Statistics Office inflation data for January
was at 4.9 percent and for February, 5.4 percent. The
average inflation, so far, for the country is 5.1
percent.
As a
result, Yap said, he expects interest rates to inch
higher while the peso-dollar exchange rate will average
between P40 and P41 to a dollar. |
