Congress office cuts 2009 growth forecast

MANILA, Philippines – The Congressional Planning and Budget Department (CPBD), the think-tank of the House of Representatives, has cut its economic growth forecast for 2009 on the back of the lower-than-expected growth in the first quarter of the year and despite expectations that the economy grew faster in the second quarter.

From a previous forecast range of 3.2 percent to 4.1 percent for 2009, the CPBD revised its economic growth assumption to a range of 0.6 percent to 1.8 percent. This is just slightly lower than the government’s latest economic growth projection of 0.8 percent to 1.8 percent, revised downward from 3.1 percent to 4.1 percent.

“Weaker-than-expected economic performance as evidenced in the recently released first quarter national income accounts constrains the CPBD to recast its 2009 gross domestic product (GDP) growth forecast for 2009 downward to between 0.6 percent and 1.8 percent,” the think-tank said in its latest economic report submitted to members of the House of Representatives.

As such, the CPBD said the government needs to boost spending to pump-prime the economy.

It noted that in the first quarter of the year, the government disbursed only P355 billion or P6.8 billion below the programmed spending of P361.9 billion.

“Hence it is imperative to implement urgently and strategically the P330 billion economic resiliency plan to cushion the adverse effects of the global financial crisis on the economy and maximize its contribution to growth, employment and poverty reduction,” the CPBD said.

Finance officials have admitted that government agencies are still having a difficult time disbursing funds for infrastructure projects allocated to them by the Department of Budget and Management (DBM).

The government, for its part, believes that the economy improved in the second quarter of the year, faster than the 0.4 percent GDP growth registered in the previous quarter.

GDP, the measure of economic activity in a country, is the sum of all goods and services produced in a country in a given period of time.

While he declined to give specific economic growth projections yet, Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) director-general Ralph Recto has said that the country’s GDP expanded faster in the second quarter than in the first three months of the year because of an improvement in consumer spending and the government’s pump-priming efforts.

In the first quarter of the year, the economy grew by only 0.4 percent compared to the same period in 2008.

It shrank by a seasonally adjusted 2.3 percent from the last three months of 2008, its lowest level recorded for the past 20 years.

The 0.4 percent GDP growth was below the government’s first quarter growth projection of 1.8 percent to 2.8 percent and below the adjusted 3.9 percent GDP expansion recorded in the same period last year. -Iris C. Gonzales, Philippine Star