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Thursday, September 22, 2005
Gov’t brings down growth rate targets
MANILA - Government economic planners lowered its economic growth targets for next year, citing the impact of higher oil prices and inflation.
Gross domestic product for 2006 is expected to expand between 5.7 percent and 6.3 percent, down from the original target of 6.3 percent to 7.3 percent, said Dennis Arroyo, a senior official at the National Economic and Development Authority.
He said the average price of Dubai crude shouldn’t exceed $60 a barrel if the economy is to grow at least 5.7 percent. To hit 6.3 percent - the high end of the new growth target range - Dubai crude should average no more than $56.34 a barrel, he said.
Nightmare
“The nightmare scenario is if it rises to an average $70 a barrel. That would cut growth to 5.4 percent,” Arroyo said.
He said the average price of Dubai crude so far this year hasn’t exceeded $50.77 a barrel - the basis in setting the 2005 gross domestic product growth target at 5.3 percent. That target remained unchanged.
Inflation forecast
The government also adjusted its inflation forecast from 7.5 percent to 8 percent-8.5 percent next year, also because of higher oil prices. Inflation this year is forecast at 7.9 percent.
The impact of high oil prices on the economy will likely be cushioned by the robust remittance inflows from overseas Filipino workers and investments, particularly in the mining sector, Arroyo said.
Overseas workers’ remittances are projected to rise to an all-time high of $9.4 billion (euro7.7 billion) this year from $8.55 billion (euro7 billion) last year. (AP)
(September 22, 2005 issue)
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