THE unabated increase in oil and food prices has forced the Development Budget Coordination Committee (DBCC) to revise its growth targets for the next two years downward, according to the National Economic and Development Authority (Neda).

Neda Acting Director General Augusto Santos told reporters on Wednesday that the government now forecasts that the country’s gross domestic product (GDP) will slow down to 5.7 percent to 6.5 percent in 2008 and 6.2 percent to 7 percent in 2009. However, by 2010, Santos said the government projects higher economic growth at 6.8 percent to 7.6 percent.

In the last DBCC meeting on growth in December 2007, it projected GDP to be within the range of 6.3 percent to 7 percent in 2008, 6.4 percent to 7.1 percent in 2009 and 6.7 percent to 7.5 percent in 2010. “This is due to high oil and food prices, but oil in particular. These two factors have contributed to inflation which is sometimes called ‘imported inflation’,” Santos said.

In terms of gross national product (GNP), Santos said the DBCC now forecasts a 6.4 percent to 7.2 percent growth in 2008, 7.2 percent to 8 percent in 2009 and higher growth of 7.9 percent to 8.7 percent by 2010. In the December forecast of the DBCC, GNP was projected to grow by 7.2 percent to 8 percent in 2008, 7.5 percent to 8.2 percent in 2009 and 7.9 percent to 8.6 percent in 2010.

Santos explained that the higher projections for 2009, especially for the upward revision of targets by 2010, was due to the fact that food prices have been stabilizing since April, and this may help temper price increases in the next few years.

“Of course we see no letup in prices of oil but the government is trying to do something [to cushion the effects of the] economic slowdown. This [higher oil prices] is not only [felt] in the Philippines, but this is experienced globally,” Santos said.

For this year, the DBCC is projecting inflation to reach 5.5 percent to 6.5 percent, mainly due to high oil prices. Measures such as subsidies, Santos said, would be crucial since the new inflation target for 2008 is higher than the 3 percent to 5 percent projected by the DBCC in December.

Due to the higher projection for inflation this year, Santos said the government has already pushed back its plans to balance its budget by 2008 to 2010. He said that this will be crucial especially due to the global economic slowdown.

“We’re looking for 2010 [to attain the] balanced budget. We need to spend to sustain growth. If we do not spend, the economy may go into recession, contract,” Santos said.

However, he said this decision of the DBCC has yet to be finalized until early next week. Nonetheless, as early as yesterday, Santos said the Neda would like to see additional funds go into infrastructure projects since these are long-term investments and the return on investments are high.

The Neda also sees a continuation of subsidies. Currently, the government is subsidizing the cost of rice through the rice sold by the National Food Authority (NFA) and oil-import taxes.

However, even with the movement of the balanced-budget target to 2010, Santos does not see the possibility of retaining NFA rice prices. He said the plan to increase NFA rice prices is still being considered by the government despite a no-balanced budget scenario this year. “Subsidizing rice is bleeding the government,” Santos said.

Meanwhile, the DBCC forecasts that exports will grow by 6 percent in 2008 and 2009 and 8 percent in 2010, while imports are seen to grow by 7 percent in 2008 and 2009 and 9 percent in 2010.

Santos said exports have been on the decline since 2006, when it grew by 14 percent. This growth, he said, was not sustained in 2007 when it reached around 6 percent to 7 percent in 2007.

The DBCC also changed its forecast 91-day T-bills to be within the range of 4.5 percent to 6.5 percent in 2008 from the December forecast of 3.5 percent to 4.5 percent. The forecast for 2009 and 2010 remained the same as the December 2007 forecast of 3.5 percent to 5.5 percent.

To compute these targets, Santos said the oil assumption used was $90 to $105 per barrel of Dubai crude. Currently, Dubai crude is at $123 per barrel.

The government also projects that the peso will be trading within the range of P42 to P45 per dollar. This is the same projection the DBCC had last December.

THE unabated increase in oil and food prices has forced the Development Budget Coordination Committee (DBCC) to revise its growth targets for the next two years downward, according to the National Economic and Development Authority (Neda).

THE Export Development Council (EDC) is now targeting to submit to Malacañang for approval the new three-year Philippine Export Development Plan (PEDP) by the middle of the year with six new key challenges being taken into consideration.

THE national government and the Japanese government are now in the process of creating a medium-term framework that will serve as a blueprint for Japan’s assistance to the Philippines in the next five years, according to the National Economic and Development Authority (Neda).

THE province of Saskatchewan in Canada will need 10,000 to 12,000 Filipino skilled workers to fill in the increasing demands of its labor market in the next five years, says its top official visiting the Philippines.

THE Department of Agriculture (DA) has lifted the temporary ban on all imports of domestic and wild birds, along with poultry and its products from the Canadian province of Saskatchewan, following official confirmation showing that the avian influenza (AI) virus in the prairie area no longer exists in the last three months.

THE Philippine government expects to save up to $500 million annually from rice imports with the rice self-sufficiency master plan it has rolled out.

PLANT coffee and earn! National Coffee Development Board (NCDB) co-chairperson Pacita Juan advises farmers to go back to planting coffee, the price of which has shot up by nearly 400 percent.

IT”S school time again! Some may be a little sad that the end of summer is fast approaching, while others just can’t wait to go back to school and look forward to new things: social scenes, teachers, classmates and friends.