MANILA, Philippines – The economic managers of the Aquino administration are confident the local economy will remain resilient despite the ongoing fiscal-turned-economic woes in countries that are key trading partners of the Philippines and host to millions of Filipinos working overseas.
At the budget hearing at the House of Representatives on Wednesday, August 1, the members of the Development Budget Coordination Committee (DBCC), which recommends key economic and social projects and policies to the president, cited the country’s strong economic fundamentals that could help withstand external shocks.
The economic managers said that while these shocks caused the Philippine economy to slow down to 3.9% in 2011 from 7.6% in 2010, the local conditions are better now.
Arsenio Balisacan, the Economic Planning Secretary and concurrent director general of the National Economic Development Authority (Neda), said the DBCC is confident that the country will hit the higher end of the 5% to 6% gross domestic product (GDP) target for 2012.
The higher-than-expected first-quarter growth of 6.4% provided momentum, and “we’re hoping we get close to” the same figure in the second quarter, noted Balisacan.
“Neda sees the Philippine economy likely growing on the higher end of its 5% to 6% target this year, or even exceeded it,” he said. “All our macroeconomic assumptions for this year are achievable despite the global turbulence.”
Balisacan cited growth drivers, including better labor and employment numbers, strong remittance, and strong performance of the retail sector.
The economic planning chief also cited several bright spots even with slowdown in global economy. “The government has enough fiscal latitude…. Beyond government statistics, we have reinforcing indicators such as governance and competitiveness indicators, credit rating agencies, upbeat private sector, and high stock market indices.”
For his part, Bangko Sentral ng Pilipinas (BSP) governor Amado Tetangco Jr stressed the strong fiscal and monetary position of the country that ensures it will not go the way of several European countries struggling with massive debts and deficits.
“The Philippines enjoys good macroeconomic fundamentals. Structure build up of economy has become self sustaining with support from fiscal and monetary,” the BSP chief said.
He also stressed that the 6.4% growth did not threaten inflation. “The broad-based economic growth has materialized in non-inflationary environment.”
He said that, going forward, inflation for 2012 and 2013, projected to settle within lower half of 3% to 5% target range,” giving the BSP more room to “take policy action as needed.”
Tetangco also cited the continuing resiliency of remittances, thanks to millions of overseas Filipino workers (OFW) that help keep the country’s monetary policy stable. Remittances remain as the Philippines’ highest dollar earner.
“External payments position continues to benefit from resilient remittances, BPOs (business process outsourcing), and strong capital earnings.” Gross GIR (gross international reserve) is $76.3 billion as of June 2012 and for July, the preliminary estimate is $78 billion to $79 billion. – Rappler.com