MANILA, Philippines—The government’s economic team has retained the country’s official growth targets for this year and next year, believing the Philippines is poised to still outperform many of its neighbors.
With the decision, the economic growth targets stay at the range of 6 to 7 percent for this year, and the range of 6.5 to 7.5 percent for next year.
Budget Secretary Florencio Abad, who also serves as chair of the interagency Development Budget Coordination Committee (DBCC) that sets the government’s macroeconomic targets and policies, noted that the Philippines’ growth targets are conservative but at the same time encouraging enough, given lingering uncertainties in the global economy.
In the first quarter of the year, the Philippine economy actually grew by 7.8 percent, the fastest growth rate in Asia for the period. The growth surpassed even China’s 7.7 percent.
But Abad said the economic team opted to stay conservative and decided against raising the targets despite the remarkable performance of the economy in the first quarter.
He said there remains no solid proof that the United States and eurozone will significantly recover. He also said China may be showing signs of a slowdown.
The United States, the eurozone and China are three of the biggest trading partners of the Philippines. They account for a substantial portion of Philippine export earnings and serve as key sources of goods imported by the Philippines.
“There are no changes in the macroeconomic targets. We decided to stay conservative,” Abad told reporters after the DBCC meeting Wednesday evening.
Socioeconomic Planning Secretary Arsenio Balisacan echoed Abad’s statement, saying there is a chance for the Philippines to exceed the growth targets given favorable domestic developments, but that keeping the original targets to take into account economic uncertainties outside the country is wise.
Balisacan cited improving consumer and business sentiment in the Philippines that is expected to boost consumption and investments this year and next year.
Balisacan also said the government intends to further push its infrastructure development program as a strategy to sustain a robust economic growth rate and to create jobs over the medium term.
“The government intends to build more roads, highways, railways, ports, etc. The Philippines has a huge backlog in infrastructure investments and so we want to spend more on this,” Balisacan told reporters.
Abad said that for 2013, the government’s infrastructure budget is set at P400 billion. He said the DBCC wants to increase the infrastructure budget over the years until it hits P800 billion by 2016.
The push for higher infrastructure budget comes amid views that such will significantly boost job creation and trim poverty.