MANILA, Philippines - The economic growth of the country will likely slow to 4.6% this year before picking up to 5.1% in 2012 as a global deceleration continues, the United Nations on Jan. 18.
The country forecasts, contained in the UN’s World Economic Situation and Prospects 2011 report released on Tuesday, are lower than the government’s 7-8% target and the 5% assumed in this year’s budget.
It is also lower than World Bank’s 5% and 5.4% outlooks for 2011 and 2012, respectively, that were announced last week.
The UN, which expects the Philippines to have grown by 6.8% last year -- above the 5-6% target -- said East Asian economies should expect growth to moderate this year as external demand weakened. The region’s exports, which rebounded last year, could "slow down markedly in 2011."
Growth forecasts for the region were set at 7.2% and 7.4%, respectively, for this year and the next, while those for the world were set at 3.1% for 2011 and 3.5% for 2012.
"Weaknesses in major developed economies continue to drag the global recovery and pose risks for world economic stability in the coming years," the UN said.
While East Asia had managed to rebound from the global economic crisis, downside risks exist in the form of rapid short-term capital inflows.
"These capital flows lead to exchange-rate pressures, while also increasing the risk of asset price bubbles and of accelerating inflation," the report said.
International coordination, the UN said, is needed to avert a renewed downturn. Five policy challenges were identified: continued and coordinated stimulus, a redesign of fiscal policy, more effective monetary policy and the need to address global spillover effects, access to funding for the Millennium Development Goals (MDGs), and concrete and enforceable targets.
A sidebar in the report noted that the Philippines needed to spend 1-1.5% of its GDP annually between 2010 to 2015 to meet the MDG goals for education, health and basic social services.
The report also forecast higher inflation of 4.2% this year and in 2010, from 3.9% last year -- the full-year figure is actually 3.8%. Unemployment was expected to have hit 7.4% last year.
Sought for comment, NEDA Deputy Director-General Augusto B. Santos claimed the country was not as export-dependent compared to neighbors such as South Korea and Taiwan.
"While our exports may decline... I don’t think we will be much affected," he said.
A slowdown, however, will still occur this year, said Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr.
"We are projecting a growth of 11% as compared to more than 30% in 2010," he said.