Slow 1st Quarter Growth Indicates Year-End Target Unlikely To Be Met

The government should not merely bank on PPP-driven infrastructure, multi-million cash dole outs, global economic recovery and the supposed “business and consumer” trust in government to achieve meaningful growth.

The slow 4.9% growth in the gross domestic product (GDP) in the first quarter shows how the relatively high growth in 2010 was mainly a rebound from 2009 rather than a sign of the economy being on a high growth path, according to research group IBON.

The target of 7.3% for this year, IBON added, is unlikely to be reached or sustained if all the government is banking on for this are private-public partnerships (PPP)-driven infrastructure, multi-million cash dole outs, global economic recovery and the supposed “business and consumer” trust in government.

The multiplier effects of the proposed PPPs and cash transfers are limited, IBON said. Moreover, the global economy is not recovering and even risks another downturn, with even the United Nations acknowledging that there will be weaker global growth in 2011. The so-called confidence, meanwhile, is exaggerated and is of little impact.

Also, the very poor performance in OFW earnings should be particular cause for alarm, and suggests that domestic consumption and growth will be further affected in the coming period. This could also indicate that the country is reaching or is at the limits of being a remittance-driven economy. Not only is the global economy sluggish but so many other countries of Southeast Asia, South Asia, Eastern Europe and Latin America are now also sending their workers abroad.

The slow economic growth highlights the urgency of discontinuing economic policies that overly rely on unsustainable sources of growth such as overseas workers’ remittances and foreign investments. With the administration nearing its first year, it is even more challenged to build domestic economic momentum by addressing job generation and creating conditions for strong domestic industry and agriculture, said the group. (end)

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