A DOWNWARD REVISION of this year’s growth targets will be on the table when the Development Budget Coordination Committee (DBCC) meets to assess the first semester’s sluggish economic growth.
“The revision of the growth targets is a possibility,” Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr. told BusinessWorld yesterday.
“The DBCC will study what we can do in terms of improving government spending and guarding against the global slowdown. We will also take into consideration the upside factors such as the strong performances of agriculture and services. Then, we will decide whether to revise,” he explained.
The interagency DBCC — responsible for setting the country’s macroeconomic targets — is expected to meet “soon,” Mr. Paderanga said. A definite date, however, has yet to be scheduled.
Budget Secretary and DBCC Chairman Florencio B. Abad said the panel would wait for the recommendations of the Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DoF) before deciding whether to revise the government’s “fighting” target of 7-8% growth for 2011.
The Philippine economy performed dismally in the first semester, with gross domestic product growth registering at only 4%. According to the National Economic and Development Authority, the expansion would have to hit 10% in the second half to reach the 7-8% goal.
Finance Assistant Secretary Ma. Teresa S. Habitan described this as a “challenge,” while Finance Undersecretary Gil S. Beltran said it would be “highly unlikely” the government could still meet its target.
They both assured, however, that “everything is possible.”
“The money is already with the government agencies. If they spend it all in the second semester, who knows?” Mr. Beltran said.
The slump in government expenditures was one of the main reasons for modest growth in the first semester. Mr. Abad has already promised to accelerate disbursements in order to pump-prime the economy.
Central bank officials also admitted that the government faces an uphill climb in the second semester.
“The original target appears on the high side given the growth in the first semester and the weak global environment,” BSP Governor Amando M. Tetangco said in a text message yesterday.
BSP Deputy Governor Diwa C. Guinigundo added, “I agree we need to reassess the growth targets.”
The review, said Mr. Tetangco, should factor in a “reasonable” projection of the planned increase in government spending, as well as the possible impact of the sluggish global economic recovery.
Mr. Guinigundo, meanwhile, said the government “should not stop being aspirational in [its] targeting exercise.”
“We should aim high and address what prevents us from hurdling higher bars of performance,” he added.
Despite the doubts regarding the 7-8% growth goal, Mr. Abad said the government was still on track to meet the 5-6% growth assumption used for 2011 budgeting purposes.
Mr. Beltran echoed this, saying: “The 5-6% target is very much achievable due to the continued good performance of the agriculture sector. Inflation is easing, so private consumption will be a growth driver. Remittances are also stable.”
Private sector analysts, however, were not as optimistic.
Think tank GlobalSource Partners “tentatively” maintained its 4.8% full-year forecast in a report released yesterday, but stated that it was “poised to downscale expectations.”
University of the Philippines economist Benjamin E. Diokno forecast a growth rate of 4.5-4.9% for the year, reiterating a claim that “the 7-8% aspirational goal is now unreachable.”
University of Asia and the Pacific (UA&P) economist Cid L. Terosa projected growth to register at around 4.5-5.5%.
“I don’t think the government targets will be achieved even with greater government spending and higher export growth,” he said.
Fellow UA&P economists Peter Lee U and Victor A. Abola had similar forecasts. Mr. U said 5% growth was more “doable,” while Mr. Abola went for a slightly higher 5.2%.
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By: Diane Claire J. Jiao
Source: Business World, Sept. 1, 2011
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