THE CONGRESSIONAL PLANNING AND BUDGET DEPARTMENT has scaled down its growth forecast for the year to a range of 4.6 to 5.1 percent, saying the global slowdown and high inflation had a more adverse impact on the economy than previously estimated.

CPBD, the economic research arm of the House of Representatives, earlier projected that the country’s economy, as measured by the gross domestic product (GDP), would grow anywhere between 5.6 and 6 percent this year.

The growth forecast of the CPBD is lower than the government’s official target of between 5.5 and 6.4 percent set by the administration’s economic managers.

“With the revisions in August in the quarterly national accounts by the National Statistical Coordination Board, the CPBD is herewith reckoning that GDP growth would hover between a more conservative range in 2008,” the research unit said.

CPBD was referring to the revision made by the NSCB for the first quarter economic growth figure from an earlier reported 5.2 percent to only 4.7 percent.

For the first half, according to the NSCB, the economy grew 4.6 percent. This was much slower than the 7.6 percent recorded in the same period last year.

The slowdown was largely blamed on sharp increases in the prices of fuel and food products, which forced households to reduce their spending on non-essentials. Corporate profits and the economy in general registered slower growths as a result.

High inflation was attributed to the surge in fuel prices in the world market brought about by rising demand from growing economies, especially of India and China, and by tightening supply.

Prices of food products, which make up about half of the consumer basket of an average Filipino household, also rose significantly in the past months because of the increase in the cost of pesticides and fertilizers, which used oil as input.

Inflation, the rate of increase in the prices of basic goods and services, hit 12.5 percent in August, the fastest pace in 17 years.

The Bangko Sentral ng Pilipinas earlier said inflation would remain at double-digit level until the first quarter of 2009.

CPBD expressed optimism, however, that 2009 would be better than 2008, projecting GDP growth to accelerate to 4.9-5.7 percent.

The research unit said next year’s growth would be boosted by spending relating to the 2010 elections and easing of inflation to single-digit levels. Global demand for the country’s exports is also seen to grow faster as the world economy rebounds from the ill-effects of the oil crisis.

CPBD’s growth forecast for next year, however, is still short of the government’s official target of between 6.1 and 7.1 percent.

The National Economic and Development Authority earlier said some of the contributors to growth next year was the expected recovery of the US economy. In the second quarter, the US economy grew 3.3 percent, prompting expectations that the contraction seen late last year was a thing of the past.

The US economy accounts for 15 to 17 percent of the Philippines’ export income.