The last quarter of the year would add 1 to 2 percentage points to the Gross Domestic Product, putting the Philippine economy close to the target range of 6 to 7 percent growth for the year, according to George Barcelon, president of the Philippine Chamber of Commerce and Industry (PCCI).
But Barcelon warned the current crisis in the Middle East and the increase in interest rates could pose challenges for the economy.
In the second quarter, growth was at a slow pace of 4.7 percent, putting the average in the first semester at 4.3 percent.
“We are facing headwinds. The Middle East conflict brings about uncertainty. We hope this would not flare up to the point where big Middle East countries will get involved because as we know they are big producers of oil. Already, Saudi Arabia has cut back on its crude production because of soft demand,” Barcelon said in a press conference yesterday announcing the Philippine Business Conference & Exhibition to be held at the Manila Hotel on October 25 and 26.
While price rollbacks have been made the past two weeks, Barcelon said “we might see higher oil prices.”
“This will be a concern especially that the priority now is how to mitigate inflation,” he added.
Barcelon said another cause for concern is the announcement of the Bangko Sentral ng Pilipinas it is contemplating another 25-basis point increase in key rates, taking a cue from the US Federal Reserves’ own direction.
“If we don’t mirror movements abroad, the peso will depreciate. If we mirror such increase, we will not breach 57 pesos to the dollar,” he said.
“If consumers buy less on the peso they have, this might affect the economy,” Barcelon said.
Higher interest rates are an added cost to businesses, which translate to higher prices of their goods and services.
But Barcelon expressed hope the “ber” months in the run-up to Christmas would perk up consumer sentiment.
For Perry Ferrer, chair of the PCCI industry committee, the last quarter of the year would be boosted by remittances from overseas Filipino workers and fuel economic activity. Remittances rose 2.9 percent to $18.79 billion in the first seven months, cash remittances rose 2.9% to $18.79 billion.
In his remarks at the event, Barcelon said based on the PCCI’s consultations with local chambers for the PBC&E, “there is consensus that the Philippines may be able to reach Vision 2050 of having a first-world economy,
where there is zero hunger, affordable housing, accessible healthcare, human empowerment and human dignity.”
But he said “this entails accelerating efforts to put the house in order to attract our fair share of foreign investments and expand our exports markets, and developing our own natural resources to provide for our people. “
Barcelon said lingering issues continue to persist: incomplete integration of systems in the automation of business permitting and licensing systems, primarily because of the absence of connectivity in more than 60 percent of the country; regulatory agencies that are strong on regulation but are not mindful of the development aspect of their agencies; neglect of agriculture and fishery; stunted growth of micro, small and medium enterprises because of their lack of access to finance and technology, compounded even further by high cost of production and logistics and; putting the onus on business the task of reducing carbon footprint and addressing climate change issues instead of having a whole-of-society approach.
