Philippines raises medium-term growth targets

The Philippines' economic managers have raised the country's medium-term growth targets.

Budget Secretary Florencio Abad on Monday said the inter-agency Development and Budget Coordination Committee decided to raise its economic targets as follows:

6-7 percent in 2013;

6.5-7.5 percent in 2014;

7-8 percent in 2015; and

7.5-8.5 percent in 2016

The new targets are higher than last year's 3.9 percent growth in the country's gross domestic product, which is the total amount of final goods and services produced in the country.

The new targets come after the Philippines enjoyed a 6.4 percent expansion in the first quarter, the highest in Southeast Asian and second fastest in Asia after China.

"There is a growing consensus in the international community that we are headed towards a virtuous cycle of economic expansion," Abad said.

Philippine economic managers had wanted to increase growth targets for this year, but decided otherwise in the face of a global slowdown caused by the euro zone debt crisis and weakness in the US and Chinese economies. They expect the external trade sector to take a hit from the global slowdown.

As such, the DBCC retained its exports and imports growth forecast for this year at 10 and 12 percent, respectively. Exports grew by 5.5 percent, while imports 4.6 percent in the first four months of this year.

Exports growth however is expected to accelerate to 12 percent a year in the next two years, and to 14 percent in 2015 and 2016. Imports are seen growing 14 percent next year, 15 percent in 2014, and 16 percent in 2015 and 2016.

Despite the peso's recent sharp appreciation, the DBCC forecast the peso to average 42-45 to a US dollar starting this year through 2016, after the exchange rate averaged P42.3:$1 last year.

"The peso is expected to remain broadly stable against the dollar over the medium term," Abad said.

Inflation is expected to range from 3-5 percent next year and in 2014, before easing to a range of 2-4 percent in 2015 and 2016.

The benchmark 364-day Treasury bill rate is forecast to settle at 2.5-4.5 percent this year, up from last year's 2.3 percent. From 2014 to 2016, the one-year rate would range from 3-5 percent.-Interaksyon (July 09, 2012 4:30PM)