CAYETANO PADERANGA: Economy to grow lower than 5-6 percent growth target this year. INQUIRER FILE PHOTO
The Philippines cut its growth and trade forecasts for this year and the next on uncertainty over the global recovery, government officials told a Senate budget hearing on Wednesday.
The Aquino administration now expects growth this year to be between 4.5 and 5.5 percent, lower than a 5-6 percent growth target under its budget assumptions for the year, Economic Planning Secretary Cayetano Paderanga told the Senate hearing.
The government now forecasts exports and imports to grow 5 percent and 13 percent, respectively, this year, lower than previous estimates of 9-10 percent and 17-18 percent. It also cut 2012 trade forecasts.
A document from the inter-agency Development Budget Coordination Committee (DBCC) indicated that underspending had affected growth as disbursements from January to August reached P947.2 billion, or 16 percent less than the P1.126-trillion program.
As a result, the budget deficit for the eight-month period reached P34.5 billion, or merely 12 percent of the planned P191.9 billion for the period.
With Malacañang failing to spend some P157.4 billion in the eight months to August, the DBCC said “catch-up plans [are] not enough.”
This was despite Budget Secretary Florencio Abad’s statement last month that Malacañang’s plans to catch up on its spending program were working despite a budget surplus in August.
Abad said national government spending seemed to have finally turned the corner as the state spent P114.93 billion in August, the highest monthly record during the Aquino administration.
This represented “the first positive growth of monthly disbursements during the year,” he added. “This hopefully starts the reversal of the contraction in spending experienced during the previous months.”
Earlier this week, the National Statistics Office reported that export revenues in August dropped 15.1 percent to $4.05 billion.
This meant exports have been contracting yearly for the fourth month in a row, a trend that was attributed mainly to the lackluster business in the global electronics sector.
Last week, the World Bank said it scaled down its 2011 growth projection for the Philippines to 4.5 percent from 5 percent previously, although “strong macroeconomic fundamentals are cushioning the impact of the global economic turmoil.”
According to the bank’s Philippine Quarterly Update, the slowdown in the United States and Europe was affecting Philippine exports but the domestic economy at large was holding out.
The World Bank noted that the Philippines’ external position and macroeconomic fundamentals remain strong. With a report from Reuters