By Reuters
MANILA, Philippines (UPDATE) - The Philippine government's growth target this year of 7% to 8% may be more difficult to achieve after the disaster in Japan and with the turmoil in the Middle East, a presidential spokesperson said.
"When we came up with the 7% to 8% economic growth target, we were not expecting the political violence in the Middle East and the earthquake and tsunami in Japan," Ricky Carandang said on Sunday.
"I would have to admit it would be more challenging to attain the target given these developments," he said.
Finance Secretary Cesar Purisima said they would review economic targets for this year, but assured that uncertainties in the world market would not have a significant and long-term effect on Philippine growth prospects.
“[The] measures being undertaken by fiscal and monetary authorities – such as the pending review of macroeconomic assumptions by economic managers and raising of interest rates by the central bank – are all precautionary,” Purisima said.
On Wednesday, economic planning Secretary Cayetano Paderanga said the governmentmay lower this year's growth target range, which is above estimates of 5% growth by most analysts as well as the World Bank and Asian Development Bank.
The central bank has said it was also reviewing the remittance growth forecast of 8% this year.
Remittances from around 10 million Filipinos overseas -- about one-tenth of the population -- are a key support of the peso and a driver of consumption in the Southeast Asian economy, which posted 7.3% growth in 2010, its fastest in more than 3 decades.
Officials have said they need more time to assess the impact of a potential slowdown in trade and development loans from disaster-stricken Japan, the Philippines' major trading partner, and reduced remittances from Filipinos working in the Middle East and North Africa.
Japan's disaster may be negative for the Philippine economy in the short-term, but the country should benefit from its Asian neighbor’s massive reconstruction drive, central bank officials said last week.
"Over time, as the efforts to reconstruct and rehabilitate the Japanese economy proceeds, higher demand will contribute to more resilient domestic economy and that will also have some favorable impact on the emerging markets, including the Philippines," central bank deputy governor Diwa Guinigundo said.
The central bank raised its interest rates by 25 basis points last Thursday to rein in inflation, which is expected to continue to pick up due to higher food and fuel prices.
