MANILA, Philippines - A unit of the United Nations (UN) sees the country’s gross domestic product (GDP) growth accelerating to 4.8 percent this year after a 3.7-percent growth last year despite the spillover impact of the global economic slowdown led by the US as well as the debt crisis in Europe.
Sudip Ranjan Basu, economic affairs officer of the UN Economic and Social Commission for Asia and the Pacific (UNESCAP), said the Asia Pacific region including the Philippines remains the global growth engine but would expand at a slower pace of 6.5 percent this year on the back of slackening demand for the region’s exports in advanced economies.
The GDP projection of UNESCAP is lower than the Cabinet-level development Budget Coordination Committee (DBCC) target of five percent to six percent.
Data showed that the growth rate of Asia Pacific developing economies declined to seven percent last year from 8.9 percent in 2010 due to the deterioration in the global environment with accentuation on the debt crisis in Europe and the uncertain outlook in the US.
“Despite the slowdown, the region remains an anchor of stability and growth pole for the world economy,” Basu said in a press conference.
He pointed out that the region’s growth engines are projected to continue to grow at robust rates with China posting a strong growth of 8.6 percent although slower than last year’s 9.2 percent while India registering a faster expansion of 7.5 percent from 6.9 percent.
The slower GDP growth in the region, he explained, could be traced to the spillovers of the eurozone turmoil, the global oil price increases, the excess liquidity and volatile capital flows as well as high and volatile commodity prices.
Despite higher prices, the UNESCAP official pointed out that inflation in the Asia Pacific region would ease to 4.8 percent this year from 6.1 percent last year.
For the Philippines, Basu said inflation would ease to 3.7 percent this year after rising to 4.8 percent last year from 3.8 percent in 2010 due to rising oil and food prices.
This is within the three percent to five percent target set by the Bangko Sentral ng Pilipinas (BSP) for this year and next year.
He added that key downside risks include the eurozone debt crisis, the rising oil prices in the world market, loose monetary policies as well as the imposition of trade restrictive measures by the developed economies, and the weak demand from advanced countries.
According to him, the debt crisis in Europe would cut economic growth in the Asia Pacific by at least 1.3 percentage points and slash export earnings by $390 billion.
Furthermore, he said oil price increases would lift inflation by 1.3 percentage points with a greater impact on the poor people.
BSP assistant governor Cyd Tuano Amador said the Philippines is not immune from the impact of the economic slowdown in the US as well as the sovereign debt crisis in the eurozone area.
“The Philippine economy is not immune but is well-insulated,” Amador stressed.
She explained that the Philippine economy could deliver faster, higher quality, and more inclusive growth because of strong macroeconomic fundamentals.
She added that the country has policy space and flexibility to ride out the global headwinds having reduced interest rates by 50 basis points so far this year to support economic growth.