UN commission sees 6.7% growth for RP economy in 2008

MANILA, Philippines – The Philippine economy is forecast to grow by 6.7 percent this year despite the looming economic recession in the US, the United Nations Economic and Social Commission for Asia and the Pacific (Unescap) said.

In its Economic and Social Survey for Asia and the Pacific 2008, the Unescap said the country’s economic growth will be supported by strong domestic demand, investment and government consumption.

Unescap noted the report made by the government of a 7.3 percent growth in the gross domestic product (GDP) in 2007.

“The Philippines is expected to see robust private consumption as a result of booming remittances,” the report said.

The country’s projected 6.7 percent growth this year is seen to be faster than Indonesia’s 6.2 percent growth, Malaysia’s 5.8 percent,  and Singapore’s 4.9 percent.

But the country’s economic growth is comparatively slower than Vietnam’s 8.2 percent, China’s 10.7 percent and India’s nine percent.

Philippine inflation is forecast to hit 3.5 percent this year from 2.8 percent in 2007, on the back of food price increases.

“For many countries in the region, food prices are a bigger inflationary concern than oil prices,” Unescap said.

“In the Philippines, food accounts for 50 percent of the consumer price index (CPI), far more than the seven percent for energy,” the agency said.

The UN agency said the Asia-Pacific region has entered a “phase of heightened uncertainty” amid financial turmoil due to fall-out from the sub-prime credit crisis in the US, the threat from rising inflation, and a major slowdown in the US economy.

As a whole, the Asia-Pacific region is seen to grow 7.7 percent in 2008, albeit slower than 8.2 percent expansion in 2007.

The survey also warned that the broader impact of the sub-prime crisis in the US is “yet to be seen.”

In its simulation, the Unescap said a US recession is expected to cut GDP growth in the Philippines by 2.5 percentage points.

The Philippines, however, will be less affected by a US recession than China, Indonesia, Korea, Singapore, Taiwan and Thailand.