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EXPERTS
in the country’s economic and financial agencies are due
to review their macroeconomic projections this week; and
this early, the word coming out of the agencies is that
there will be a slight divergence in growth figures but
a consensus on inflation being higher than earlier
projected, as the impact of the rising prices of oil,
food and other items start to be felt.
Projections for the peso-dollar exchange rate are
expected to be a little changed, at a possible P40 to
P43 to the dollar, from the previous projection of P42
to P45.
Despite
the continuous increase in the price of oil, as well as
the price of food, the country’s economic managers are
likely to stick—when the interagency Development Budget
Coordination Committee (DBCC) meets this week—to the
earlier forecast of 6.3-percent to 7-percent gross
domestic product (GDP) growth in 2008.
Augusto
Santos, acting director-general of the National Economic
and Development Authority (Neda), said in an interview
that there may be a “slight uptick” in inflation due to
higher fuel and food costs, but he gave assurances the
figure will not match the 2004 level, when oil prices
started climbing to unprecedented levels.
The Neda
sees local output, measured as GDP, to continue to hold
up this year, and Santos sees the 6.3- percent to
7-percent range holding; however, sources in other
agencies predicted a slower pace ranging from 6 percent
to 6.7 percent.
The
sources with knowledge on the most recent
macroeconomic-goal settings said Friday this new range
represented a downward revision from forecast growth
originally ranging from 6.3 percent to 6.7 percent.
The
adjustments in the settings, set for Cabinet approval
seen convened within the week or soon after, was in
recognition of less favorable global as well as domestic
economic and financial conditions.
On
inflation, the differences were less pronounced, with
experts in agreement that the inflation rate will be
higher in 2008 compared with 2007. “It will not deviate
so much from our previous assumption. [Projected
inflation] will be below 6 percent,” said Santos in a
phone interview.
The
acting socioeconomic planning secretary stressed that
the figures are just “proposed assumptions” and that the
committee will meet again to finalize its economic
targets.
Informed
sources project the inflation rate to stay within the
4.0-percent to 5.0-percent range in 2008. This figure
has already factored in the higher price of oil, the
need to subsidize rice and the wage increase sought by
the labor sector that is now pending with regional wage
boards.
Earlier,
the Bangko Sentral ng Pilipinas (BSP) said that its
forecast for inflation this year is at 3.0 percent to
4.0 percent; however, it recognized supply-driven
factors pushing inflation well past the target 3.0
percent to 5.0 percent due to the surging commodity
prices.
The
staple rice, retail prices of which have risen more than
40 percent the past few months, accounts for around 8
percent of the consumer price index in the country.
But the
BSP insisted that inflation expectations remain
“well-anchored” as the increase in consumer prices that
exclude food and oil, also called core inflation,
remains small.
Nevertheless, the commodity price increases have clouded
the fiscal sector and put to doubt the broad goal of
achieving a balanced budget this year.
The
peso-dollar exchange rate’s projections have been
modified, with a source from DBCC having said that the
committee will revise its peso-dollar exchange rate
downwards to P40 to P43 for every greenback, lower than
its earlier projection of P42 to P45 to the dollar.
While
this could slash the revenues of exporters and the
income of overseas Filipino workers, it could temper
inflation since imported oil would become cheaper.
Domestic interest rates, particularly the 91-day
benchmark Treasury bill rate, was seen averaging 3.5
percent from original forecast of around 3.67 percent,
according to informed sources.
The
weighted average interest rate for the year,
representing average rates not just for the benchmark
but for three- and six-month rates, as well, should be
around 4.6 percent.
The
trade imbalance will continue this year, where import
growth averaging 9 percent is seen to outpace export
expansion of only 8 percent.
Earlier,
government think tank Philippine Institute for
Development Studies (PIDS) President Josef Yap said in a
report that he is not so confident about the prospects
of attaining a 6.3-percent to 7.0-percent GDP growth
this year.
Yap
projected that GDP growth could be lower at 5.9 percent
due to the absence of election spending; a low
investment rate of a government fixed on its target of
balancing the budget; and the strong peso.
The PIDS
official 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 will grow by a modest 3.8 percent
this year.
Yap also
expects growth in personal consumption expenditure to
ease to 5.5 percent, while structural constraints will
not prevent investment 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 to 5 percent. Yap said average
inflation in 2008 will be in the vicinity of 5 percent. |
