RP to grow slower than neighbors, says Chase

After being hailed as the country least affected by the regional financial crisis and probably the first to recover from the economic slump, the Philippines has again lost its edge and is now expected to post a slower economic growth compared to its Asian neighbors.

This was the separate assessment of Chase Securities Inc. and John Mac Gowan, treasurer of HSBC in the Philippines.

According to a study conducted by the International Fixed Income Research Group of Chase Securities, "the Philippines is on a different path--one marked by a smaller potential rate of expansion."

Chase said the economy's growth momentum has recently been affected by President Estrada's declining popularity which has forced him to effect a Cabinet reshuffle, initially with his economic team.

Chase, however, lauded the change in the economic team saying that "the new economic team that he (Estrada) has put in place has the intention and the potential of moving the economy in a direction that would improve its growth trend."

McGowan, on the other hand, said that what is of more importance to investors is the government's ability to stick to its target deficit rather than constantly revising the target.

At present, McGowan admitted that as a custodian bank, HSBC has noted that there is just barely a trickle of foreign investment coming into the country.

He said "foreign investors at the moment are more attracted to invest in Korea and Taiwan which have a higher growth potential than the Philippines," adding that "constantly revising the deficit target lessens the credibility of the government."

Earlier, Finance Secretary Jose T. Pardo has indicated the possibility that the deficit target for this year may be revised upward.

While still officially maintaining P62.5 billion as the full year deficit target for 2000, Pardo admitted in a Congressional hearing that there is a possibility that the deficit could worsen to P67 billion if revenue targets are not met and expenditures are not reduced. -