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THE
interagency Development Budget Coordination Committee (DBCC)
will likely revise downward most of the macroeconomic
assumptions it made for this year, suggesting a weaker
Philippine economy as a result of the recession in the
United States and a rice shortage.
Bangko
Sentral ng Pilipinas (BSP) Deputy Governor Diwa
Guinigundo, in a presentation Tuesday before executives
of the Business Processing Association of the
Philippines (Bpap), said there might be a cut in gross
domestic product (GDP) outlook of between 0.3 percent to
0.5 percent from the current target range of 6.3-percent
to 7-percent growth rate.
GDP is
the sum of all products and services produced in the
country.
The cut
is expected since the government’s GDP forecast is the
highest among the 5-percent to 6-percent range of many
analysts’ and economists’ targets.
The DBCC
reviews its target at least twice a year, at midyear and
in September.
Also
Tuesday, meanwhile, James McCormack, head of
Asia-Pacific sovereign ratings at Fitch Ratings, spoke
to reporters in Manila on the Philippines’s budget
deficit and economy.
The
government wants to balance the budget this year after a
decade of deficits.
“We’re
still projecting a deficit. We’re not looking for any
balanced budget. Government debt ratios continue to
decline and that’s a bigger focus for us than a given
year’s fiscal balance.
“There
is still some concern on sustainability of revenues.”
On
economic growth, he said, “There will be probably some
growth risks this year with a weaker global
environment.”
At the
Bpap forum, Guinigundo said many of the macroeconomic
assumptions are no longer achievable, including the
country’s inflation rate, or the movement of some basket
of consumer items.
“The
inflation target is still 3 to 5 percent, plus and minus
one percentage point,” Guiniguindo said.
“We
expect that these shocks coming from global front, will
impact the inflation forecast in 2008. In other words
the upside risks is predominant as the downside risk as
far as inflation is concerned.”
Guinigundo, however, insists that despite the runaway
inflation rate of 6.3 percent in March from last year’s
average of 2.8 percent, the pressure still comes from
oil and commodity prices and there has been no symptom
that it is causing second-round effects such as hikes in
wages, transportation, and other commodity items aside
from rice.
He said
the BSP is still confident it can achieve its inflation
target of between 2.5 percent and 4.5 percent in 2009.
“We
recognize that at this point inflation is nearing 6.4 to
6.5 percent for March of 2008; BSP did not respond with
a high-interest-rate policy, but we kept our policy rate
because we recognize that the shocks are coming from the
supply side.”
He did
not say, however, if DBCC will also revise its forecast
on the country’s export growth of about 8 percent to
$61.2 billion and imports’ rise of 9 percent of $69.7
billion; he was also uncertain about the fate of
previous forecasts on the peso-dollar exchange rate of
between P42 to P43.
In an
earlier report, Standard &Poor’s analyst Subir Gokarn
said Indonesia, Malaysia, the Philippines and Thailand
will face “somewhat moderate growth” as a result of the
US recession.
Hong
Kong Shanghai Banking Corp., on the other hand, said
that there is now evidence that the rise in consumer
goods in the country is already spreading beyond rice
and other food items.
“Sure,
raising rates at this stage may risk slowing growth, but
this appears the inevitable price to pay to keep both
inflation and expectations in line,” the bank said in
its research note released this week. (With Bloomberg) |
