Wednesday, 29 April 2009

More like 4% growth in the Philippines: Villegas

M.V. de Leon, Johanna E. Roldan
Business Mirror

ECONOMIST Bernardo Villegas of the University of Asia & the Pacific painted a more rosy picture of the Philippine economy this year, predicting a 4-percent gross domestic product (GDP) anchored on election spending, the government’s economic stimulus package and remittances from overseas Filipino workers (OFWs).

Villegas, speaking at a forum of the Management Association of the Philippines on Tuesday, said the World Bank and the International Monetary Fund (IMF) failed to consider several key factors when they came up with lower GDP forecasts for the year.

“No, it is not zero or 1 percent as the World Bank and IMF said. The Philippines will have a 4-percent GDP [growth] this year,” Villegas said.

He sees the inflows of OFW remittances through the formal channels at $16 billion to $17 billion this year.

With the exchange rate seen to go to the P50 level because of low foreign direct investments and declining exports, he said the families of the OFWs, especially those in the countryside, will have higher purchasing power.

Villegas said the stimulus package of the government, which focuses on infrastructure spending in the provinces, will also boost farmers’ productivity.

With the early rainy season the Philippines is experiencing, Villegas said the agriculture sector is in for a good year.

Then there is the election spending, which, Villegas said, will be a “massive pump-priming” from the candidates and their private-sector supporters.

He sees each presidential candidate spending up to P5 billion. “And I see at least seven candidates.”

Villegas said growth will begin to accelerate in the third quarter of the year once the funds from the campaign kitty and the remittances from OFWs start circulating in the economy.

He said the first half GDP will probably be at the 3.5 percent to 4 percent range.

In the second half, Villegas said the economy could grow to as high as 4.5 percent.

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