RP economy seen to do even better at 8%

THE PHILIPPINE economy is expected to grow by 8 percent this year due to favorable conditions that are seen to benefit emerging markets, according to Barclays.

The international finance institution recently upgraded the country’s growth forecast, a tad higher than the government’s official target.

It was the third time Barclays raised its forecast for the Philippines. In August, it announced that the economy would grow by 7 percent. Earlier in the year, it projected a 4.3 percent rise.

For 2011, the Philippines may grow by 5 percent, Barclays said, taking into account base effects arising from the economy’s strong performance this year.

Also, the finance institution said inflation in the country would remain manageable. It sees consumer prices rising this year and the next by only 3.7 percent, which is considered to be tolerable.

In its latest paper, “Global Outlook: Nothing More than a Pause,” the financial services firm said that the global economy appeared to have a tough time sustaining its recovery.

In particular, the debt crisis in the Euro zone and the sluggishness of the US economy continue to threaten the world economy, the firm said.

Europe and the United States are major export markets for many developing countries like the Philippines.

“The slowdown in the global economy ... has generated concerns that recovery is in jeopardy. We believe these concerns are largely misplaced and that the odds of a renewed recession are remote,” Barclays said.

It expects the world economy to grow by an average of 4.5 percent this year as stimulus measures implemented by governments across the globe help lift industrialized economies out of recession.

Stimulus measures include higher public spending by governments and reduction of key interest rates by central banks. Low interest rates tend to spur demand for bank loans, promoting consumption and investments.

“By our estimates, global economic growth is likely to register more than 4.5 percent this year—a very respectable showing comparable to the boom years of 2004-2007. We are projecting a slower pace of growth after that [in 2011], but still in excess of 4 percent,” Barclays said.

Michelle Remo, Phil. Daily Inquirer