The Philippine economy is to remain resilient amidst internal and external developments with gross domestic product (GDP) posting a 4.7 percent growth for this year.
In an economic briefing sponsored by Standard Chartered Bank, Senior Economist Mike G. Moran said the local economy has displayed resiliency despite the sustained uptick in the prices of crude oil in the offshore market and the accelerating interest rates.
Moran said "the economy is more resilient," which is propped-up by good fiscal performance, particularly with the implementation of the reformed value-added tax that is expected to bring-in more revenues to the government.
As a consequence, Moran believed the national government’s budget deficit for the year will hit only
P130 billion to as much as P140 billion, slightly lower than his range projection of P140 billion to P150 billion some months back. This is also substantially lower than the P180 billion expectation of the authorities.
The improved fiscal standing will have a positive impact on the local currency, Moran said, adding that the peso for the year will end at
P54 versus the US dollar, aided by the continued robust remittances from overseas Filipino workers.
For the coming year, however, the Standard Chartered Bank Hong Kong-base economist projected a slower economic growth at 4.2 percent due to the slowdown in export performance, specifically the lower demand for electronic products offshore.
But Moran opined dollar remittances or export services will offset the negative impact of a lower export performance on goods, which would allow the peso to remain at
P54 during the first half of 2006 and would later slide down to between P54.50 and P55.
For 2006, consumption is projected to grow between three percent and four percent.
The strong consumer spending is, also, expected to drive up the local economy. Though, the higher consumption will be tempered by the monetary tightening that the Bangko Sentral ng Pilipinas (BSP) is expected to adopt to check on inflation. (FCS)
