Philippine President Gloria Macapagal-Arroyo Wednesday expressed her confidence in the country's economy although it has been "hit hard" by the global economic crisis in the past year.
During her mid-year briefing on the national economy, President Arroyo said the country's economic fundamentals remain firm and that the funds raised by the government through the continued collection of the value-added tax will help cushion the country from the global hike in food and oil prices as well as the effects of the meltdown of the U.S. financial system.
"While no one can predict the future during these uncertain global economic times, it seems that our measures at home are seeing us through the toughest times," Arroyo said.
The Southeast Asian country's gross domestic product (GDP) growth posted only a 4.6 percent increase in the second quarter this year, much lower compared to the 8.3 percent growth recorded in the second quarter in 2007.
On Tuesday, the Manila-based Asian Development Bank said it has downgraded the economic growth forecast for the Philippines from 6.0 percent to 4.5 percent in 2008 and raised the inflation forecast from 4 percent to 10.5 percent.
ADB cited the combination of high food and oil prices as the main forces to push up inflation and undermine consumer spending.
The Philippines, which buys most of its fuel demands from abroad and has become the world's largest rice importer, is one of the Southeast Asian countries worst hit by inflation in 2008. Consumer prices grew 12.5 percent in August year-on-year, hitting a 17-year high but already showing signs of moderation.
"There is no doubt that the global economy has hit the Philippines hard. The upheaval in the global economy in the past year has clearly had a significant and painful impact on every Filipino through higher prices of food, fuel and rice," said the President.
"But even as some external challenges are letting up, we will continue to focus on reigning in inflation, bringing down prices of the most essential commodities, increasing targeted investments to our poor and getting our economic engine moving to a higher gear," Arroyo said.
"Our reforms have helped us in this time of global economic upheaval. Without them, we would not be as confident as we are that our economy will withstand these external shocks," she added.
Statistics show that the country may "have weathered the worst of the global storm" as shown by the declining oil prices and other positive indicators, said the President.
President Arroyo said that the government will continue its efforts to "strengthen the banking system, improve our fiscal health, encourage investments in our most promising growth sectors and expand our potential sectors."
President Arroyo's statement echoed the analysis given by ADB economists on Tuesday.
While trimming the forecasts for the Philippines' growth, Thomas Crouch, ADB's deputy director general for the Southeast Asia department, said that the Philippines is in a better position to respond to the financial turmoil in the United States.
"There have been macroeconomic policies that have make it (the Philippines) less vulnerable and in better position to respond to the negative impacts of these events," said the economist.
Source: Xinhua
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