RP ECONOMIC GROWTH STILL ON TRACK DESPITE BUDGET SQUABBLE
MANILA, JUNE 22, 2006 (STAR) (AFP) The Philippines is still on track to post 5.5 percent economic growth this year even though the legislature refused to pass a higher national budget, officials said Wednesday.
Economic Planning Secretary Romulo Neri said there had been "good surprises" so far this year such as the strong performance of agriculture as well as export growth in excess of 15 percent in the four months to April, far exceeding expectations.
This had boosted optimism that the gross domestic product (GDP) would still grow by 5.5 percent this year even though Congress had refused to pass President Gloria Arroyo's proposed 1.053 trillion-peso (19.87 billion-dollar) budget bill.
The impasse crimps spending on infrastructure projects.
"Second quarter (performance) could even be better than the first quarter because of agriculture growth and exports," Neri told reporters, remarking that the weather had been favourable this year with no destructive typhoons so far.
Dennis Arroyo, planning chief of the government agency, said the outlook for exports in the second half of the year is even more bullish, particularly in the last three months of 2006 because of the seasonal inventory buildup.
"Given the trend and the outlook for the second half, it's possible that exports this year will see growth of even more than 15 percent," said Arroyo, no relation to the president.
Congress had wanted to trim 31.1 billion pesos off the proposed budget but Arroyo threatened a veto, saying increased spending was needed to sustain growth. As a result of this stalemate, the government must operate on the 2005 budget level of 918.6 billion pesos.
Neri said that if the proposed 2006 budget had been passed GDP growth this year would likely hit six percent.
He remarked that the budget deficit was still expected to go down to 124.9 billion pesos this year or 2.1 percent of GDP. The deficit in the first five months was only 44.2 million pesos, well within projections.
Neri also remarked that economic fundamentals remained strong despite the weakening of stock markets and currencies all over Asia amid fears that the US Federal Reserve will soon raise interest rates some more.
The officials said their main concern was the US economy, as higher US rates would likely be followed by a rise in Philippine interest rates.
Chief News Editor: Sol Jose Vanzi
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