Cebu seems like to Grow massive in 2007

Published on page B1 of the December 4, 2006 issue of the Philippine Daily Inquirer

THE PHILIPPINE economy is likely to miss the official growth target of 5.7 to 6.5 percent next year, owing largely to the slowdown in the economies of the United States and Japan, the country's biggest export markets.

This was the projection made by the Congressional Planning and Budget Office (CPBO), the economic think tank of the legislature. The CPBO's economic growth forecast for next year ranges from 4.7 percent to 5.3 percent.

CPBO said in its latest paper on the Philippine economy that lower demand from the United States and Japan would retard the export growth of the Philippines. The US and Japan account for about 35 percent of the Philippines' export revenues.

The assumption that the US economy would continue to decelerate next year was based on the consecutive interest rate hikes that the US Federal Reserve implemented for two years ending last June. The US economy grew by 2.2 percent in the second quarter from 2.6 percent the previous quarter.

According to the National Economic and Development Authority, income from exports is equivalent to about 50 percent of the Philippines' economic output. In the first nine months of this year, export earnings hit $35.118 billion, representing a 16.4-percent growth from a year ago.

Robust exports, however, was still not enough for the country to meet its official economic growth targets. The Philippine economy grew by only 4.8 percent in the third quarter, falling short of the 5.2 to 5.8 percent target for the period, and by 5.4 percent in the first three quarters. The government set a growth target of 5.5 to 6.1 percent for the full year.

But the Neda is still confident that the GDP growth target for 2006 will be attained. The Neda cited the slowdown in inflation, increase in remittances from overseas Filipino workers, and the release of the P46.9 billion supplemental budget for the government that are expected to boost spending.

Because the CPBO's economic growth target is lower than the official goal, the think tank likewise sees the government missing its revenue collection target for next year.