Bangkok (UN Information Services) The Philippines economy is forecast to grow by 6.7 per cent in 2008, marginally down from its fastest growth in over 30 years in 2007, at seven per cent, but still backed by strong domestic demand, investment and government consumption, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
In its Economic and Social Survey of Asia and the Pacific, ESCAP said the strong growth was up from 5.4 per cent in 2006. In 2007 investment grew by seven fold to 10.4 per cent from 1.4 per cent in 2006. The strong performance of domestic demand more than compensated for the significant drop in the rate of exports, ESCAP said. Actual export growth fell in 2007 to 6.1 per cent from 11.1 per cent a year earlier.
Inflation in 2008 is forecast to edge up to 3.5 per cent from 2.8 per cent last year after registering 6.2 per cent in 2006. A stronger peso which appreciated 15 per cent against the dollar over 2007 brought downward pressure on inflation. ESCAP pointed to price increases in food, beverages, and tobacco as the main items adding inflationary pressure in 2008.
The lower inflation outcome of 2007 paved the way for significant cuts in interest rates by the central bank with overnight interest rates falling to 5.25 per cent. In January the bank lowered its benchmark rates to 5.0 per cent from seven per cent previously.
ESCAP noted that outwards direct investment rose to US$3.1 billion in 2007 from US$100 million in 2006, while inward direct investment rose to US$2.3 billion in 2007 from US$2.1 billion in 2006.
Net unilateral transfers, largely remittances from overseas workers, rose to US$14.4 billion in 2007 from US$13.2 billion a year earlier. Overall, the current account surplus increased to US$7.1 billion from US$6.0 billion in 2006.
Further information on the Survey can be found at:
For more information, please contact:
Hak-Fan Lau, UN Information Services, ESCAP
Tel.: +66-2-288-1866, Mob.: +66-84700-1147
Ari Gaitanis, UN Information Services, ESCAP
Tel.: +66-2-288-1862, Fax: +66-2-288-1052