RP TO REVIEW 2005 GDP TARGET DUE TO OIL THREAT
MANILA, August 27, 2005 (STAR) (AFP) Soaring oil prices may force the Philippines to revise its economic growth target this year, Economic Planning Secretary Augusto Santos said Friday.
The government's Development Budget Coordination Committee, which has set a 5.3 percent growth domestic product (GDP) growth target this year from 6.1 percent in 2004, is to meet next week, Santos said in a statement.
After Manila releases GDP growth figures Monday for the three months to June, the committee is to meet "to review its assumptions and validate its economic projections for the rest of the year," he said in a statement.
Santos said he remained confident Manila would achieve its original growth target despite the expected slower growth in the three months to June and "extraordinary increases in oil prices."
With GDP expected to have grown between 4.7 and 5.1 percent in the three months to June, compared to 4.6 percent in the three months to March, the economy would need to grow by between 5.8 and 6.0 percent in the second half, he said.
This "is possible as we expect agriculture, industry and services to grow by 4.7 percent, 4.8 percent, and 6.6 percent, respectively, in the second half," Santos said.
Agriculture would benefit from the end of an El Nino drought, while mining, food and beverage manufacturing, and construction are expected to support industrial growth, he said. Financial services should also perk up with the non-performing loans of banks back to single digits, he added.
Nevertheless, government simulations suggest "that a rise in the price of oil to an average of 60 dollars per barrel starting August 2005 until the yearend will cause a slowdown in economic growth to around 5.2 percent," he said.
Higher inflation due to more expensive petroleum products would jack up production costs and dampen domestic demand, he added.
Trade data released this week were not encouraging, with imports, many used as raw materials for the key electronics industry, were down 1.5 percent in the first half to 21.52 dollars.
Analysts suggested manufacturers were cutting back on production until oil prices stabilized.
News editor-in-chief: Sol Jose Vanzi
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