Central bank sees continued high growth
Central bank sees continued high growth
By Doris Dumlao
Philippine Daily Inquirer
First Posted 03:13:00 02/02/2008
MANILA, Philippines -- The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, sees the economy continuing with the high growth and low inflation environment that made 2007 a banner year, despite threats of a sharp US-led economic slowdown this year, an official said.
The government's economic growth target of 6.3-7.0 percent remains achievable this year and government spending on infrastructure can push up growth even beyond 7.0 percent without stoking inflation, BSP Deputy Governor Diwa Guinigundo said at a news briefing.
"And even if we grow by 7.0-7.5 percent, that won't necessarily be inflationary,” he said. “It will not be a big challenge to monetary policy because potential capacity has moved up in the same way that in the US in the 1990s, they were able to push up the capacity to grow, courtesy of the IT [information technology] and the dotcom [boom]."
According to the latest BSP forecasts, the inflation rate this year will likely be 3.5-4.4 percent, well within the 3.0-5.0 percent target range.
For next year, the BSP projects an inflation range of 2.1-3.3 percent, also within the 2.5-4.5 percent target.
The central bank's latest inflation forecasts for this year factor in a possible P125 increase in the daily wage, a recurrence of a severe drought related to the rain-inducing La Niña phenomenon, which can dampen farm output, and continuing upward pressures on fuel, utility and some food prices.
The government on Thursday reported a stronger-than-expected growth in the gross domestic product of 7.4 percent for the fourth quarter of 2007, bringing the full- year growth to a 31-year high of 7.3 percent.
"It means that notwithstanding the shocks that we've experienced for most of the year coming both from the demand and the supply side, the resilience of the economy was ably demonstrated," Guinigundo said.
"At the same time, it also bolsters our confidence that even as the global economy goes into a slowdown and perhaps even a recession in some key economies, the resilience of the Philippine economy as shown in the fourth quarter of 2007 will serve us in good stead for the rest of 2008," he added.
The central bank's upbeat outlook for 2008 has not factored in a P75-billion fiscal stimulus package proposed by a presidential economic adviser, Governor Joey Salceda of Albay province, which calls for hefty tax cuts and public spending. Edited by INQUIRER.net