RP CUTS 2006 ECONOMIC GROWTH TARGET / INCOME GAP BIG OBSTACLE - WB
MANILA, September 22, 2005 (STAR) (AFP) Government economic planners said Wednesday they have cut their Philippines growth forecast next year by up to a percentage point with high oil prices seen dampening consumer demand.
Gross domestic product (GDP) growth for 2006 is now expected at 5.7-6.3 percent, lower than the original target of 6.3-7.3 percent, said Dennis Arroyo, policy and planning chief at the National Economic and Development Authority (NEDA).
Arroyo, no relation to President Gloria Arroyo, said Manila is keeping its 2005 GDP growth forecast of 5.3 percent. The economy grew by 4.7 percent in the first half of this year.
NEDA projections expect inflation to creep up to a range of 6.8-7.0 percent amid soaring prices of oil, most of which is imported.
The economy is also expected to contend with higher interest rates.
Central bank governor Amando Tetangco said Wednesday that monetary policy may have to be tightened after the US Federal Reserve increased its key interest rate by a quarter percentage point and warned of further hikes.
"The Fed rate hike will tend to reduce further the interest rate differential" between peso- and dollar-denominated instruments, Tetangco said.
"With this and higher liquidity growth, and their implications for future inflation, we are not ruling out monetary tightening in the short term."
The central bank's monetary board will hold its monthly policy meeting Thursday.
The central bank has held off any adjustments after raising rates by 25 basis points in April, the first such move in five years. Its overnight borrowing rate stands at 7.00 percent and overnight lending rate at 9.25 percent.
The consumer price index jumped 7.2 percent from a year earlier in August, exceeding the central bank's forecast range of 6.6-7.1 percent.
Domestic liquidity rose 13.6 percent year-on-year in July to 2.21 trillion pesos (39.3 billion dollars), faster than June's 12.8 percent clip, due to higher foreign exchange inflows.
World Bank: Income gap in Philippines hampering development 09/21 3:53:08 PM
MANILA (AP) - The gap between rich and poor in the Philippines is among the highest in Asia and is one of the biggest obstacles to more rapid development in the country, the World Bank said Wednesday.
The richest 5 percent of households account for nearly a third of national income, while the poorest 25 percent of households earn only 6 percent of the income, the bank said.
The poorest Filipinos "are effectively excluded from social and economic development" of the country, said Joachim von Amsberg, the bank's country director.
The bank estimates that nearly half of the nation's 84 million people live on less than US$2 a day.
In the last decade, Indonesia and Thailand have cut their poverty rate by 11 and 9 percentage points, respectively, while in the Philippines, poverty fell only by about 5 percentage points in the same period.
"High inequality and modest economic growth have translated into slow progress on poverty reduction in the Philippines," the bank said, while Amsberg noted that the government has begun to design programs targeted toward the poor.
He said the most effective policy for promoting equity is a solid financial basis and sufficient revenues to spend in pro-poor programs, which requires raising more taxes.
"While sometimes perceived as anti-poor, raising more revenues through improved administration and policy adjustments, is in fact essential for building a strong state that is reliable and accountable in undertaking policies and programs that reduce poverty," he said.
Chief News Editor: Sol Jose Vanzi
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