UN report sees low 4.6% growth for 2011

The economy is likely to grow 4.6 percent this year far lower than the government projected seven percent gross domestic product (GDP) expansion, according to a United Nations (UN) report.

In its “World Economic Situation and Prospects 2011,” the UN said the Philippine economy, as measured by gross domestic product (GDP), is projected to expand by 5.1 percent next year.

The GDP is the total value of final goods and services produced in the country.

The UN GDP projection for the Philippines was lower than the government target of between seven percent and eight percent starting this year until 2016.

The World Bank earlier had projected that the economy may grow five percent this year and 5.4 percent next year.

The UN said inflation rates in the Philippines may hit 4.2 percent this year and in 2012.

In 2011, the UN said export revenues are expected to grow further, although at a much slower pace than in 2010, as demand from developed economies weakens.

The UN said the GDP in East and South Asia expanded by 8.4 percent in 2010, up from 5.1 percent in 2009, the report states.

A moderate slowdown is expected in the near outlook with GDP forecast to grow, on average, by 7.1 percent in 2011 and 7.3 percent in 2012.

The UN projected that Indonesia will grow 6.2 percent this year and 6.4 percent next year; Malaysia, 5 percent and 5.3 percent; Thailand, 4.8 percent and 5.1 percent; Vietnam, 7 percent and 7.2 percent and Singapore, 4.6 percent and five percent.

The report added that the impact of the crisis on output growth and government spending during 2008 to 2010 and a projected slow and gradual economic recovery toward 2015, Nicaragua and the Philippines would suffer a setback of two percentage points in poverty reduction.

Bolivia, Ecuador and Kyrgyzstan would experience a setback of about 1 percentage point.

In the face of these setbacks, the UN said the governments of Ecuador, the Philippines and Nicaragua would need to spend an additional 1 percent to 1.5 per cent of GDP per year between 2010 and 2015 in order to meet the MDG targets for education, health and basic services, compared with the pre-crisis scenario.

The report added that the mood for fiscal tightening also seems to be taking hold in many developing countries, even in those with a policy intention of safeguarding “priority” social spending.

“This is a worrying trend, particularly where GDP growth is moderating because of weaker export growth and continued weak domestic demand, and also because protecting social spending is not the same as the significant expansion needed in most countries that still display large shortfalls in MDG achievement,” UN said.

The MDGs are a set of time-bound, concrete and specific goals to reduce extreme poverty, illiteracy and disease that 189 national leaders committed to achieve by 2015. –Daily Tribune