MANILA, December 20, 2003  (STAR) By Conrado Diaz Jr. - The economy is estimated to have grown by 4.2 percent this year, lower than the 4.4 percent growth posted last year mainly due to the drop in exports and a slowdown in industrial activities, Socioeconomic Planning Secretary Romulo Neri said yesterday.

In a press briefing, Neri said the gross domestic product (GDP), however, is expected to grow at a higher rate of between 4.9 percent and 5.8 percent next year, boosted by the pickup in world economic growth, stronger inflow of dollar remittances from overseas Filipino workers (OFWs), and the heightened spending related to the May 2004 national elections.

Gross National Product is targeted to grow 5.2 to 6.0 percent in 2004, he added. For 2003, though, Neri estimates GNP to grow at 5.4 percent, or within the government’s target range of 5.1 to 5.7 percent.

"We’re confident of meeting our 2003 targets," Neri said. "Should there be no policy reversals next year, our economic fundamentals remain supportive of a stable growth environment."

The projected 4.2 percent GDP growth rate this year is the low end of the government’s target of 4.2 to 5.2 percent.

Neri said the local economy, anchored by strong agricultural output and continued expansion in the services sector, was able to overcome the impact of the US-Iraq war, the outbreak of Severe Acute Respiratory Syndrome, the July 27 Oakwood mutiny and the impeachment move against Chief Justice Hilario Davide Jr.

He warned, though, that while economic growth would be sustained next year, it could be dampened by risk factors such as a weaker peso and the inflationary effects of higher-than-expected oil prices, higher tariff adjustments and the increase in Meralco’s power rates.

Neri added the uncertainty from the change in leadership related to the presidential polls could also affect the economy, particularly investor sentiment, "but this should increasingly clear as platforms are revealed."

Neri, who is also National Economic and Development Authority director general, downplayed the results of a recent survey made by independent research firm AC Nielsen showing most Filipinos’ pessimism on the economy.

"They see the problems all over the place, it makes people think we’re hopeless. But the economic results show otherwise. I guess there is no high correlation between economic performance and optimism," he said. — With AFP report

Reported by: Sol Jose Vanzi

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