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Saturday, October 23, 2004
Change in US leader may cut RP job growth
A NEW administration under US presidential candidate Sen. John Kerry may affect the Philippine economy negatively.
Economist Cayetano Paderanga, chairman of the Institute for Development and Econometric Analysis Inc. (Idea), said the impact of a new US administration is one of the reasons for Idea’s less optimistic outlook on the Philippine economy for 2005.
“The policies of a new (Kerry) administration, especially on US-RP relations and on investment flows and outsourcing will affect the Philippines,” he said in an economic briefing sponsored by the Bank of Commerce at the Cebu City Marriott Hotel last Thursday.
According to a Washington report earlier carried by Sun.Star, Kerry said he and his vice presidential running mate John Edwards would “move swiftly to curtail shipping of jobs overseas” to keep American jobs with American citizens.
Cebu is host to a growing number of US-based business process outsourcing companies, especially call centers.
The US elections are on Nov. 2.
Aside from a new US administration, Pade-ranga said the continual surge in world oil prices, upward trend in global interest rates and slowdown in the world economy have resulted in Idea’s forecasting of only a five to 5.3 percent growth in the country’s gross national product (GNP) and 4.8 percent to 5.1 percent growth in gross domestic product (GDP) next year.
The government’s macroeconomic outlook under the 2004-2010 medium-term plan for next year is a GDP growth of about 5.3 percent to 6.3 percent.
GDP refers to the amount of goods and services produced by a country, while GNP is the GDP plus remittances of overseas Filipino workers and other income earned from abroad.
In the local scene, the possible new taxes crafted by the government, which will lead to higher costs of doing business in the country, and the less credible policy framework of the current administration that has resulted in the “wait-and-see” attitude of the private sector are major factors that will contribute to a lower growth in the country’s economy next year, Paderanga said.
Idea’s forecasts are based on assumptions that the peso’s value will be at 57.50 to 58.50 to the US dollar, the inflation rate will be six to 6.7 percent, and the 91-day Treasury bill rate at eight to 8.8 percent.
“Until we (government) fix things up, the peso will continue to devaluate,” Paderanga said. (JBN)
(October 23, 2004 issue)
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