PHL economy may grow 5.5% in 2010, says ex-Finance chief

The Philippine economy will grow at a "moderate pace" this year as money sent home by Filipinos abroad will remain "robust" and continue to feed domestic private consumption, according to former Finance Secretary Roberto de Ocampo. "Let's take into account that [there is] no more election-related spending. However, money transfers from overseas Filipino workers to the Philippines remain robust," De Ocampo said in a conference hosted by RFO Center for Public Finance and Regional Economic Cooperation. De Ocampo, who served as Finance Secretary during the presidency of Fidel Ramos, estimated that that the country's economy may grow by 5.5 percent this year. The National Economic and Development Authority sees the country's full-year economic at 7 percent. "This is only a conservative estimate," De Ocampo told participants of the conference. De Ocampo pointed out that the country's agriculture sector is still "difficult" to predict, given the irregularities in weather pattern as of late and the prevalence of storms in the country with uncertain magnitudes. The agriculture sector suffered severely this year due to typhoons which resulted in output drop by almost 3 percent in January-September, he explained. De Ocampo noted that the strength of local private consumption and exports will fuel industry output. "A more positive investment outlook going into 2011, which will hopefully translate into stronger capital infusion can be another source of industry growth," he said. Investments will pick up a bit in the absence of major political uncertainties, De Ocampo pointed out. "The new administration's ability to pursue its battle cry of transparent governance and more efficient bureaucracy will also be significant in the rate of capital formation," he said. Inflation De Ocampo said that the country's inflation rate this year will "rise modestly" to 4.5 percent. The central bank forecasts the inflation rate to hit 3.8 percent this year, within the full-year target of 3.5-5.5 percent. There are expectations of higher commodity and energy prices on the back of increased global economic activity, De Ocampo explained. Abundant global liquidity is likely to fuel commodity prices in the global markets, he added. Monetary authorities are expected to be "on-guard against price swings" and to take appropriate measures as the circumstances require, De Ocampo said. Global recovery Meanwhile, the strength of global recovery particularly across southeast Asia is still uncertain as of the moment that a "double-dip" growth path has not yet even been ruled out by some market observers, De Ocampo noted. "Nonetheless, when normalcy is finally restored, the world will most likely have to deal with a new economic order," De Ocampo said. According to him, the world cannot afford to have the US in "state of depression" for a long time. The US economy, the world's biggest, went through a recession in 2007. De Ocampo pointed out that the US has the world's largest consumer base and the "greatest influence on the global flow of funds." Revenues As for the government's revenues, De Ocampo said that it will not expand much but deficit will be "contained." "Revenue intake will be largely dependent on tax agencies' efficiency and real sector developments as the government appears to abide by its no-to-new-tax-measure policy in the short run," he said. "Revenue base has become much thinner after the passage of several revenue-eroding legislations," he added. He also said that no hefty privatization transaction is in sight for next year. "But the fiscal house seems determined to adjust expenditures to limit the shortfall should the insufficiency in funds approach an alarming rate," De Ocampo said. -- OMG, GMANews.TV