Philippines Economy Growth 2012

Posted by Maribojoc Bohol on January 17th, 2012 in Local News

By Joann Santiago

Banking giant HSBC projects a 3.6 percent growth for the Philippines both for 2011 and 2012, lower than government targets for both year, on account of negative external environment.

In a report dated Jan. 17, 2011, HSBC economist Trinh Nguyen said “a new year is here, but it is uncertain if new hope can be found.”

She said the natural disasters that ravaged the country last year along with spill-overs of the Eurozone debt crisis and the double-digit contraction in exports are expected to make output of the domestic economy bleaker.

HSBC projects -6.6 percent growth in the country’s exports for 2011 and slight lower -6.5 percent growth this year.

The government growth target for 2011 was between 4.5-5.5 percent while it was between five to six percent for this year.

The report said the lower growth projection for the country was on account of the lower-than-expected growth, as measured by gross domestic product (GDP), for the second and third quarter of last year at 3.1 percent and 3.2 percent, respectively.

Nguyen, however, said the dampening of growth can be countered through among others the government’s P72.1 billion accelerated spending program announced last October, which she also expects to further boost government spending this year.

“Instead of pinning their hopes for growth on external demand, policy makers will look inwardly for sources of growth in 2012, underpinned by strong fiscal support for consumption,” the report said.

“In the medium and long term, increasing the Philippines’ competitiveness and diversifying its exports base would the optimal solution. For the shorter term, however, the government will have to resort to fiscal and monetary loosening to bolster aggregate demand,” it cited.

Relatively, growth can be bolstered by a cut in central bank’s policy rates when the Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB) meet for its first policy rate setting meeting on Thursday this week.

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