8% growth for PH? Depends on euro crisis, says official

MANILA, Philippines – To project where the Philippine economic growth will be heading, watch how the eurozone crisis is unfolding and how it will affect China.

This was the message of Socioeconomic Planning Secretary Arsenio Balisacan to reporters during a press briefing on Wednesday, July 11, days after the interagency Development Budget Coordination Committee (DBCC) announced its rosy macroeconomic assumptions.

According to DBCC’s latest macroeconomic projections, the Philippine economy is projected to grow by:5% to 6% in 2012
6% to 7% in 2013
6.5% to 7.5% in 2014
7% to 8% in 2015
7.5% to 8.5% in 2016.

Since these economic growth projections are anchored on expectations that the country’s external trade would fully recover in the next 4 years, the ongoing eurozone financial-turned-economic woes are key.

“If the Euro crisis gets worse and it spreads to Asia, China’s growth would decelerate…(The 5% to 6%) is doable as long as Europe will not become very bad,” Balisacan said, noting that if the situation in Europe worsens, this could spread to Asia and affect the country’s export sector.

Europe is facing a difficult period as many of its governments have incurred high debt and are facing rising unemployment amid massive austerity measures. The European sovereign debt crisis has started as early as 2008 and has spread through Greece, Portugal and Ireland.

Balisacan also expressed hopes that the situation in China, which is experiencing economic problems, would not worsen. China is a key trade partner of the Philippines.

Future growth

The DBCC stressed in its recent budget presentations that growth will be fueled by the government’s infrastructure spending, dollar remittances from overseas Filipinos and steady growth of manufacturing, services and tourism sectors.

Global trade, however, was felt as the crucial factor that pulled down economic growth to 3.7% in 2011 from 7.6% in 2010.

Below are the trade assumptions

Exports – 12% in 2013 and 2014, 14% in 2015 and 2016.
Imports – 14% in 2013, 15% in 2014, and 16% in 2015 and 2016

The latest growth forecasts are also anchored on expectations that inflation would remain benign at 3% to 5% in 2013 to 2014, and at 2% to 4% in 2015 and 2016. – Rappler.com