| Gov’t cuts growth target to 5-6% due to Middle East crisis, Japan disasters By Michelle Remo
Philippine Daily Inquirer
First Posted 15:51:00 03/23/2011
The government has slashed its growth assumption for the Philippine economy for 2011 to a "more realistic" range of 5 to 6 percent after taking into consideration the dampening effects of the disasters in Japan and the political turmoil in selected countries in the Middle East. Japan is one of the Philippines' biggest export markets and is home to thousands of overseas Filipino workers, whose remittances help drive domestic consumption. The Middle East, which is also home to many OFWs, serves as a key oil producer and thus adverse developments in the region affect global oil prices to the disadvantage of oil importers like the Philippines. BSP Governor Amando Tetangco Jr., one of the government's key economic managers, said the original 7- to 8-percent growth goal would remain a "fighting target," but that the lowered range of 5 to 6 percent would be taken into account for the government's macroeconomic and budget planning. He said the lower range would be more realistic given the unfavorable factors happening outside the country that may affect growth. Tetangco stressed, however, that the new growth assumption, if achieved, would still indicate a decent economic performance for the Philippines. Prior to the unusually high growth rate of 7.3 percent in 2010, the average growth of the country from 2000 to 2009 stood at 4.9 percent. "A 5- to 6-percent growth is still respectable," Tetangco said. The new growth assumption of the government is in line with most forecasts by private-sector economists, who said a slowdown is likely in 2011 due to the expected normalization process following the rare growth rate posted in 2010. Japan accounts for about 14 percent of the Philippines' export earnings, while Filipinos based in Japan account for about five percent of the total remittances sent to the Philippines. The Middle East accounts for 15 percent of total remittances sent to the Philippines. Consequently, the government is reviewing its assumptions on remittances and total foreign-currency reserves, or the gross international reserves (GIR). The remittance forecast is currently set at $20 billion, while the GIR projection is set at a range of $68 billion to $70 billion. Tetangco said that besides the remittance factor, potential increase in cost of imported oil could also dampen the country's GIR. Despite this, government economic managers said the expected adverse impact of the events in Japan and the Middle East would be manageable. They said a 5- to 6-percent growth would still mean job generation and increasing incomes for a number of Filipino households. | 
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