Philippines' GDP Estimated Growth Up 6% In 2012: Finance Secretary

By JOHN Peterson
October 16, 2012

The Filipino economy growth graph is learned to be moving northward from Finance Secretary Cesar Purisima. He says, despite global headwinds, below par national credit and fiscal deficit the economy will accelerate.

According to Mr Purisima, the growth should hover around 6 percent, above the official expectation of around 5 percent to 6 percent.

Manila aspires to grow up to 7 percent to 8 percent for the economy of Southeast Asia region that grew to 3.7 percent in 2011.

Mr Purisima told this on the sidelines of IMF and World Bank yearly fall meeting in Tokyo.

With the advent of euro - crisis, weak growth in big advanced economies, and a sharp slump in China, Mr. Purisima was still upbeat with his country's economic vision. This week IMF had declared that world economy could slip into recession, but Asia could stand tall, but not immune to relapse into slow growth, as experienced earlier, during global financial crisis.

The Philippines is in a strong position because of its export of electronic goods. The economy of the country is growing fast because
of the strong domestic demand. Call centre industry has also flourished ther and money sent home by NRFs (Nno Resident Filifinos) living abroad are added advantage.

Mr. Purisima advocates that 7 percent to 8 percent economy growth can be reached as the economy is heightened by the country's mineral reserves, which once worked well on revenue.

He also said that Mindanao, the resource-rich but impoverished southern region, has become "a whole new area of opportunity and growth gear," and the Philippines deserves to have the credit rating on its debt lifted.

Moody's Investors Service regards the country two notches into "junk" area, while Standard & Poor Ratings Services and Fitch Ratings, put it 1 rank below investment grade.

The government is making progress in its attacks against corruption and inefficiencies, which encouraged tax evasion. Reduction in interest cost, and lengthening the country's maturities have become possible through the creation of fiscal space, helped by lower rates of interest, helpful environment and improved market, said Mr. Purisima.

Last year alone the country "saved about a billion dollars in interest cost," and the budget deficit shrank to 37 percent.

Manila may tap local debt investors a bit more relative to the global bond market, "given the availability and liquidity of local market."

The existing break down of 75 percent local to 25 percent foreign issuance may be changed to 80 percent to 20 percent this year.

A meeting has been held between the bond investors and the Filipino officials in Hong Kong to apprise the investors "on what's happening in the Philippines", remarked Mr.Purisima.

The Philippines has $82 billion of foreign reserves as against foreign debt of just above $60 billion. Central bank governor, Amando Tetangco, expressed in The Wall Street Journal that the bank wishes to diversify some of those reserve holdings out of the U.S. Treasury, and into high- yielding assets.

As member of the bank's policy board, Mr. Purisima is desirous to invest more with IMF. To tide over the euro-crisis, Bangko Sentral ng Pilipinas loaned IMF $ 1 billion to aid in stabilizing the global economy, amid the euro-zone crisis. That was" a good investment:" felt Mr. Purisima.

He is hopeful relative to the revision of the country's "sin tax" to be undertaken by the Philippine Congress, especially upon ciggerettes and alcohol. He was disappointed thata Senate Committe version of the bill would generate a meagre 15 billion pesos ($360 million) in additional revenue 1/2 of the PHP 31 billion under the revision of the House of Representatives, and 1/4 of the Finance Department's advice.