Government hikes growth target to 5-6% this year

MANILA, Philippines - The government has revised the country’s economic growth target for the year to five-six percent from the current 2.6-3.6 percent on the back of the economy’s strong performance in the first quarter of the year.

The Cabinet-level Development Budget Coordination Committee, the interagency group that sets the country’s macroeconomic assumptions and targets, made the revision in a meeting late Tuesday.

“The adjustment was prompted by the first quarter gross domestic product (GDP) growth of 7.3 percent, the highest first quarter growth rate in three decades and stronger prospects for the rest of the year,” said Finance Secretary Margarito Teves, who co-chairs the DBCC with Acting Budget Secretary Joaquin Lagonera.

Lagonera, for his part, said the reforms put in place by the government supported growth in the first quarter.

“The critical and broad ranging reforms adopted by the government have enhanced the internal strength of the Philippine economy. This is what supported the robust economic expansion during the first quarter of the year. We are confident that this kind of growth will be sustainable throughout 2010,” Lagonera said.

Acting Socioeconomic Planning Secretary Augusto Santos believes that the foundation of a stronger economy is the country’s “45 consecutive quarters of growth reinforced by the 7.3-percent growth in the first quarter.”

“This is truly remarkable considering a challenging 2009 for many economies around the globe,” Santos said.

The economy expanded by 7.3 percent in the first quarter, the highest growth rate recorded since the 8.3-percent growth registered in the second quarter of 2007.

The 7.3-percent gross domestic product growth is also a marked improvement from the 0.5 percent recorded in the first quarter of 2009 and is above the National Economic and Development Authority’s growth forecast for the period of 2.9 percent to 3.9 percent.

In 2009, the economy grew by a revised 1.1 percent or within the 0.8 percent to 1.8-percent growth projection for last year.

The Bangko Sentral ng Pilipinas (BSP), for its part, said it would continue to assess the environment to formulate the appropriate monetary policy.

“The BSP will continue to implement an appropriately prudent monetary policy that will complement the government’s initiatives to underpin non-inflationary growth,” BSP Deputy Governor Diwa Guinigundo said.

The BSP’s policy rates are currently at four percent for the overnight borrowing rate and six percent for the overnight lending rate, maintained since December 2008 to cushion the impact of the global financial crisis which hit in late 2007.