MANILA, Philippines - Despite the fact that the economy may have ended 2010 on a positive note with the National Economic and Development Authority (Neda) projecting a growth of above 7%, the economy may not be able to hit its target of 7% to 8% this year.
Neda Director General Cayetano W. Paderanga is hopeful the rosy economic picture for 2010 will continue this year; however, he said hitting a 7% to 8% rise may be more realistic for 2012, given the risks to gross domestic product (GDP) growth this year.
“We will be missing the driver of election spending but the global environment is again improving and we hope that improves a lot. I think the numbers coming out of the US and Europe are slightly better than, let’s say, the numbers that were coming out last quarter,” he said.
Paderanga said the country would have posted a fourth-quarter growth of between 6.2% and 7.2% that could allow the economy to post a full-year growth of 7% to 7.4% in 2010.
“We hope 7% to 8% [will be possible this year]. We will try to have policies and programs to try to attain that as much as we can. But again, as I said, given the trends, we think it might be more achievable in 2012 than 2011 but we will still try to hit the target. Maybe sometime during the middle of the year, we will have a better idea of what else to do,” he added.
Palace: Best effort on growth goals
Amid these predictions, Malacanang said on Tuesday it will strive to meet the Neda’s growth hopes for the year through improved tax collection and a successful public-private partnership (PPP) program.
Secretary Ramon Carandang of the Presidential Communications Development and Strategic Planning Office said in an interview with reporters at the Palace press area that 2010 will “not necessarily” be a tough act to follow in terms of economic growth.
“I don’t think it’s an easy target. I think it’s a fighting target. But you have to be ambitious here. As they say, work for the best, expect the worst. So we’re working for the best. . . if the target is 7% to 8%, that’s what we’re going to work for.”
Carandang was responding to the forecast of Banco de Oro (BDO) Universal Bank that growth in 2011 will range from 5% to 6%, lower than the government target.
BDO analysts have also said 2010 would be a tough act to follow despite the renewed investor confidence generated by the Aquino administration, citing internal and external factors.
On whether the targets are likely to be revised, Carandang said, “Obviously, other analysts will have different opinions and, as I’ve said before, there seems to be some caution now among financial analysts about prospects for this year. But as far as were concerned, we’ve just begun the year. There’s no need to revisit any of our growth targets yet.”
Paderanga said the government is hopeful the demand support for economic growth seen last year will continue this year and may be achieved by raising investment rates to around 19% from 14% last year.
He earlier said the government aims to increase the country’s investment-to-GDP ratio to the same level as the country’s 18% to 19% savings-to-GDP ratio. “We’re hoping that demand support for growth will still be there and we hope also that will continue into the next year. What we’re actually trying to do is try to raise investment rates so we hope that will add to the growth.”