ESCAP sees Philippine growth at up to 3%

MANILA, Philippines — The Philippine economy will grow by no more than 3.0 percent this year as it faces the “triple threats” of renewed fuel and food price spikes and the worsening effects of the global financial crisis, according to a United Nations report.

The UN Economic and Social Commission for Asia and the Pacific (ESCAP) said in its latest annual survey of the region that current stimulus packages to ward off the worse effects of the crises were limited and that governments may have to incur bigger fiscal deficits.

Amy Wong, ESCAP economic affairs officer, said the crises were interlinked and that the number of poor in Asia and the Pacific, who already represent two-thirds of the world’s poor, would likely increase.

She added that record high oil prices in 2008 drove up the price of rice, the region’s staple, by 150 percent, hitting the poor the hardest.

Wong said that at the same time, climate change threatens to further magnify the vulnerability of the poor by increasing the frequency and severity of natural disasters and crop failures, especially in the Asia-Pacific, which is the most disaster-prone region in the world.

“The survey sees governments’ stimulus packages as an opportunity to not only reinvigorate the economy in the short term, but address the long-term issues by investing in food and energy security, social safety nets, disaster risk reduction and green technology,” she said.

Dennis Arroyo, a director at the National Economic and Development Authority, said the government agreed with the survey’s finding that given the scale of the global financial crisis, the size of stimulus spending matters.

“With our P330-billion package, the government intends to start with small-scale infrastructure projects first this year,” Arroyo said, when he explained the local implications of the ESCAP survey results.

“Stimulus spending for large-ticket infrastructure projects would start next year,” he said.

The survey said the crises required “public spending of a much larger magnitude than in the past, leading to fiscal deficits that could rise above what sound macroeconomic management would prescribe under normal circumstances.

Malacañang last month revised its target deficit this year to P177.2 billion from P102 billion, which itself had been raised from the original P40 billion.–Ronnel Domingo, Philippine Daily Inquirer