DBM confident Philippines will attain 5-6% GDP growth

With a low base of comparison in 2011 and “glowing” long-term projections, the country’s economy may grow anywhere from 5 to 6 percent in 2012, Budget Secretary Florencio B. Abad said.

At the sidelines of the Foreign Correspondents Association of the Philippines forum Thursday, Abad said government expenditures would be much higher this year than in 2011.

He said state agencies would be compelled to bid out, “short of awarding,” their proposed projects before they receive allocations.

Also, the agencies would need to regularly report their progress, Abad said.

The budget chief said anti-corruption and governance reforms would boost investor confidence, as well.

Even the ongoing impeachment trial of Supreme Court Chief Justice Renato Corona may serve to raise investor confidence in the Aquino government, Abad added.

The country’s budget deficit may likely stay within the government’s forecast range, coming from a low deficit in 2011, Abad said.

Budget Undersecretary Laura Pascua said the Aquino administration posted a budget deficit of P140 billion to P170 billion in 2011.

Ruperto P. Majuca, National Economic and Development Authority assistant director-general, said in a phone interview that the GDP [gross domestic product] growth target of 5 to 6 percent is “manageable” despite the “challenging” global environment.

“We are confident that we can counter the negative impact of external events through increased infrastructure and social protection expenditures. This will boost the domestic economy against negative risks worldwide,” Majuca said.

Economist Dr. Benjamin E. Diokno of the University of the Philippines agreed that the “best hope” for growth is accelerated public spending for capital projects.

Diokno said the rise in expenditures should offset the expected slowdown in overseas remittances and the drop in exports due to weak global demand.

However, public disbursements should translate to actual construction as soon as possible, the economist said.

“The downside is a possible slowdown in private construction” as public works increase, Diokno said.