Government urged to abandon economic growth targets this year
Sunday, July 10, 2011
AN economist advised the government on Saturday to let go of its seven to eight percent economic growth target this year given bleak prospects on exports and consumer and business confidence.
Benjamin Diokno, budget secretary of former President Joseph Estrada, suggested that the Aquino administration should adjust the target to a more realistic level of between five and six percent.
“While the economic managers continue to talk of seven to eight percent growth rates, don’t they look incredulous? It is the responsibility of the government to provide accurate, reliable information,” he said in an email.
Weighed down by high commodity prices, consumer confidence dipped to -23.1 in the first three months of the year from -8.5 compared to the previous quarter, the Bangko Sentral ng Pilipinas (BSP) said in April.
Optimism among businessmen also slipped to 31.8 percent in the second quarter from 47.5 percent in the first quarter partly due to slow business procedures and fund disbursements for government construction projects.
The administration had failed to spend P100 billion of the programmed P561.36 billion, or 17.8 percent from January to April.
Exports, which account a third of the Philippines’ $189-billion economy, is not expected to match the 34-percent uptick recorded last year due to softening demand from slow recovering Europe and the United States.
Diokno’s assessment was shared by multilateral lenders World Bank and the Asian Development Bank (ADB), which both saw economic growth hovering between five and six percent.
In contrast, the economy as measured by the gross domestic product (GDP) zoomed to its highest level in 34 years at 7.3 percent last year.
For the second quarter, Diokno believes that the economy will grow slightly lower than or, at best, equal to first quarter’s 4.9 percent.
This is a sharp departure from last year’s 8.9 percent expansion which was ably supported by election spending, massive construction activities under then Arroyo administration and base effect.
“The same base effect will work against a strong growth in second quarter this year. Public spending for second quarter is finished and all indications are that while there has been some movement underspending continues,” Diokno, an economics professor at the University of the Philippines, said.
Sun.Star tried to reach Budget Secretary Florencio Abad but was unavailable for comment.
Diokno said the full impact of the uncertainties due to the political crises in the Middle East and North Africa and the calamities in Japan will be also be reflected in the second quarter figures.
Earlier, Socioeconomic Planning Secretary Cayetano Paderanga Jr. said the interagency Development Budget Coordination Committee (DBCC) will convene soon after the second quarter numbers are out in August.
“We hope that there will be stronger growth in the first quarter due to increased investments,” Paderanga said.
Compounding the government’s woes is that none of the public-private partnership projects are expected to take off this year, according to Diokno.
He said that one or two infrastructure projects maybe bid out sometime this year but it will not have any contribution to construction output.
“The typical man in the street plans on the basis of information provided by the government. If times are going to be difficult, then it is the government’s responsibility to tell its people that times are going to be hard,” Diokno said.
The economist said it is still possible that the economy might grow by seven to eight from 2013 to 2016 if there were significant changes in fiscal strategy and if the PPP program proves successful. (Virgil Lopez/Sunnex)
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