BSP PROJECTS MUCH HEALTHIER ECONOMY IN LAST QUARTER OF THE YEAR
Manila, September 19, 2003 (STAR) By Mayen Jaymalin - Filipinos can look forward to better days and a brighter Christmas despite the current political instability and prevailing economic slump, the Bangko Sentral ng Pilipinas (BSP) said yesterday.
BSP officials have projected a much healthier economy for the Philippines in the last quarter of the year.
"We are confident that we would achieve our target of four to five percent inflation rate and our economy would improve in the last quarter of the year (even with the prevailing political problems)," said Francisco Dakila Jr. of the BSP-Economic Research Department.
While Dakila said too much politics has affected investment and stifled economic growth in the first half of 2003, he noted there are clear indications that the current economic trend can still be reversed.
He cited BSP data that show growth in personal consumption, investment and other elements of the country’s gross domestic product (GDP) in the past few months.
The outbreak of Severe Acute Respiratory Syndrome (SARS) and the United States-Iraq war, which resulted in the drop in exports, "were all lumped up in the second quarter, that is why our economy was down during that period," Dakila told reporters at a weekly forum at the Holiday Inn.
He said that the government has since instituted appropriate measures that can boost the country’s economy before the year ends.
"It will need time for the measures to succeed but we are very hopeful that those measures implemented by the government will address the drop in exports and other concerns," Dakila said.
BSP-Economic Research Department officer-in-charge Francisco de Leon noted that the dollar-peso exchange rate is expected to stabilize in the last quarter due to the large remittances of dollars from overseas Filipino workers (OFWs).
"We are expecting growth in OFWs’ remittances in the last quarter since they usually send money to their loved ones during Christmas and with that, we are optimistic that the dollar-peso exchange rate would stabilize," he said.
De Leon pointed out that when the US-Iraq war broke out in March, the range of the peso’s "volatility" — the change in value of the peso against the US dollar from day to day — was 59 centavos, but has dropped to 20 centavos at this time.
At the same time, opposition Sen. Rodolfo Biazon called on the government to come out with appropriate safety nets to protect the country from the economic impact of the failed talks at the World Trade Organization.
Though the First World countries failed to pressure poor countries to open their markets to richer nations’ agricultural products, the government must still implement measures to boost the competitiveness of local products in the global market and improve the country’s exports, he said.
The other day, a stock analyst said too much politics triggered a drop in investments and stifled projected economic growth and targeted investments for the remaining third of 2003 and part of 2004.
Astro del Castillo cited the United States-Iraq war, the outbreak of SARS and the failed mutiny last July 27 as some of the causes for the drop in investor confidence for the past 27 months, but pointed to politics as the major factor.
Prevailing uncertainties, according to a survey of the New York-based Roper Asia ASW Asia Pacific, were making businessmen more cautious in hiring and investing.
The survey showed that nearly 21 percent of businessmen, an increase of five percent from the last survey, said they would hire fewer people over the next six months. The percentage of businessmen who said they intend to hire more was unchanged from the last survey at 19 percent.
Del Castillo added that the lack of a clear direction in the country’s political climate has also contributed to instability in the financial market.
His statements jibed with calls from both administration and opposition lawmakers for President Arroyo to categorically declare her intentions for the presidential polls next year in order to defuse what they claim is the prevailing leadership crisis in the country.
Earlier, Finance Secretary Jose Isidro Camacho said political infighting is weighing down the economy and sending the peso down near its all-time low.
The peso has weakened even further, trading at 55.05 to the dollar late yesterday from 54.96 on Monday. Its historic low is 55.75 to the dollar, the level seen on Jan. 17, 2001 when a popular revolt toppled then President Joseph Estrada.
Camacho said that in a meeting with foreign portfolio investors in Paris, London and Singapore last week, he found they had a "fairly positive view" of the Philippines, citing a strong revenue performance and respectable economic growth this year.
Even the failed military mutiny by some 300 rebel soldiers on July 27 was not too worrisome to the investors, Camacho said, remarking that most of the country’s financial markets "had already normalized," since then.
However, domestic sentiment over the economy is still being adversely affected by bitter political squabbles that have broken out in the wake of the failed mutiny, Camacho said.
He described the situation as "really frustrating" because foreign portfolio investors were happy with the economy and government reforms.
Camacho said there was some concern over the continuity of government policies after national elections in May 2004.
Mrs. Arroyo has said she will not run in the May elections so she could focus on economic reforms but she is widely expected to reverse this position.
Reported by: Sol Jose Vanzi
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