UNESCAP says PHL economy to grow 4.8% amid global slump

The Philippine economy will manage to accelerate up to 4.8 percent in gross domestic product terms this year, while the world reels from a slowdown driven by a sputtering US economy and the deepening European debt crisis, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) said Thursday.   Sudip Ranjan Basu, UNESCAP economic affairs officer, said the Asia Pacific region including the Philippines–remains the global growth engine growing at 6.5 percent this year.   “…[T]he region remains an anchor of stability and growth pole for the world economy,” Basu said in a press conference.   UNESCAP data showed that the growth rate of developing economies in Asia Pacific declined to 7 percent last year from 8.9 percent in 2010, largely as the global economy deteriorated with the European debt crisis and the uncertainty of the US recovery.   The region’s growth engines are projected to continue to grow at robust rates, with China posting a strong growth of 8.6 percent, although slower than last year’s 9.2 percent, with India registering a faster expansion of 7.5 percent from 6.9 percent, Basu noted.   Market volatility, the euro zone crisis, higher oil prices, and volatility in capital flows are responsible for a slower growth in the region, the economist said.   Still, inflation in Asia Pacific would ease to 4.8 percent this year from 6.1 percent last year, he added.   Philippine inflation, on the other hand, would decelerate to 3.7 percent this year from 4.8 percent last year.   The key downside risks remain the euro debt crisis, rising oil prices, loose monetary policies, as well as the imposition of trade restrictive measures by developed economies, and the weak demand of advanced countries, according to UNESCAP.   The debt crisis in Europe would cut economic growth in the Asia Pacific by at least 1.3 percentage points and slash export earnings by $390 billion, Basu said.   Furthermore, he said oil price increases would lift inflation by 1.3 percentage points with a greater impact on the poor.   Bangko Sentral Assistant Governor Cyd Tuano Amador said the Philippines is not immune from the impact of the economic slowdown in the US and the sovereign debt crisis in the Eurozone area.   “The Philippine economy is not immune but is well-insulated,” Amador stressed.   She explained that the Philippine economy could deliver faster, higher quality, and more inclusive growth because of strong macroeconomic fundamentals.   The country has policy space and flexibility to ride out the global headwinds, having reduced interest rates by 50 basis points so far this year to support economic growth.   The Monetary Board lowered interest rates by 25 basis points last January 19 and by another 25 basis points last March 1 on benign inflation outlook and fragile global economic growth.   This brought the overnight borrowing rate back to a record low of 4 percent and the overnight lending rate to 6 percent. —VS, GMA News