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IT was
bound to happen: the government has finally announced
plans to recalibrate its macroeconomic goals for 2008,
the original numbers having been rendered obsolete by
the strong peso, weak exports and the rising price of
world oil.
Government sources told reporters key changes include
appropriate adjustments to next year’s exchange rate,
the assumed price of oil, and inflation.
Particularly worrisome was inflation, averaging only
around 2.3 percent from year-to-date but seen rising
next year to as high as 5 percent under the original
program.
The
broad idea was to project it higher in view of the
rising price of oil, which essentially means that a
basket of services or goods costing Filipinos P100 right
now could cost much more by next year, according to
government sources.
The
Cabinet-level Development and Budget Coordination
Committee (DBCC) has recognized the inevitability of the
adjustments and was aware the technocrats, grouped
loosely as its technical executive board, have started
the initial groundwork, according to government sources.
The
Bangko Sentral ng Pilipinas (BSP) previously fixed next
year’s inflation path at only 4 percent plus or minus 1
percentage point, or as low as 3 percent but as high as
5 percent.
“The
DBCC has recognized that inflation next year could rise
higher than originally expected because of the rising
price of oil,” the sources said.
The
macroeconomic review extends from next year’s targets
all the way to 2010, it was added.
Under
it, the assumed exchange value of the peso, now hitting
seven-year highs of P43 per US dollar, should also be
adjusted from the originally assumed P46 to P48 per
dollar between now and 2010, to a still-to-be determined
range.
Domestic
and foreign analysts have been falling over each other
predicting where the unit’s exchange rate was likely to
be, with some saying it should strengthen to P40 per
dollar by year-end and even P38 per dollar by next year.
Its
strength is owed in part to the weakening of the US
dollar and also to strong foreign inflows attracted by
the country’s improving macroeconomic underpinnings.
Of
course there is that seemingly intractable price of oil,
only recently costing $100 a barrel, when the DBCC
projected it to cost only from $62 to $70 from this
year’s assumed price of only $61 to $64 a barrel.
There
are also plans to recast next year’s export growth, seen
expanding next year by 13 percent from this year’s 12
percent, in recognition of the anticipated slowdown of
the US economy which gobbles five parts of every item or
commodity that the Philippines exports every year.
There
remains optimism at present that the continued strong
foreign inflows, in tandem with the projected
$14-billion remittances of overseas Filipino workers,
should help push a consumption-driven growth already
averaging 7.3 percent in the first half.
The DBCC
originally set next year’s growth to average from 5.8
percent to 6.6 percent in terms of gross domestic
product.
This
year the DBCC projected growth ranging from 5.7 percent
up to 6.5 percent. |
