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THE Philippine economy is likely to expand below the
government’s goal this year and next on the back of costlier food
and oil, the United Nations (UN) said.
In its World Economic Situation
and Prospect mid-2008 update, the UN said the Philippine gross
domestic product is projected to grow 5.4 percent this year and 5.3
percent next year. The UN’s projections for the Philippines are
lower than the Development and Budget Coordinating Committee’s
forecast of between 5.7 percent and 6.5 percent this year, and 6.2
percent to 7 percent next year.
The UN said East Asian growth
likewise will ease considerably as the region faces a slowdown in
the major developed economies and high prices of energy and raw
materials.
“Although contagion from the
financial side has been relatively contained, a combination of
increased international turmoil and lower economic activity in the
region could trigger problems in the financial markets of the
region’s emerging market economies,” the UN said.
Under its pessimistic scenario,
the UN said the region would enter into an outright recession on the
back of strongly weakening demand for exports. It projected that
Indonesia may grow 5.9 percent; Korea, 6.9 percent; Malaysia, 5.5
percent; Singapore, 4.9 percent; Thailand, 5.1 percent; and Vietnam,
6.8 percent.
The UN said the rise in commodity
prices appears to be the single most important factor affecting
headline inflation around the world, especially since the second
half of last year.
“In addition to the continued
rise in oil prices, world food commodity prices increased by 25
percent in 2007 and further stepped up their pace to an annual rate
of 57 percent by March 2008,” the report said.
The UN also said that Philippine
inflation could rise to 4.1 percent this year before easing 3.5
percent next year. Price increases in the country averaged a record
low of below three percent last year.
“Inflation in the region will
increase in 2008 to the highest level of the decade before slowing
in 2009,” the UN said.
The UN said inflation is
projected to rise to 6.9 percent this year in Indonesia, 3.5 percent
in Korea, 3.9 percent in Malaysia, 4.9 percent in Singapore, 5.1
percent in Thailand, and 19.1 percent in Vietnam.
The report noted that other
factors putting pressure on inflation were excess capacity
utilization and higher wages. In addition, many countries faced the
dilemma of choosing between controlling inflation or stimulating the
economy through looser monetary and fiscal policies.
--Darwin G. Amojelar
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