UBS downgrades growth outlook for Asean countries
By Michelle Remo
Philippine Daily Inquirer
First Posted 20:46:00 01/27/2008
MANILA, Philippines--INVESTMENT BANK UBS HAS downgraded its economic growth outlook for the Philippines and other Southeast Asian countries, taking into account the volatile external environment brought by a possible recession in the United States.
From an earlier gross domestic product (GDP) growth forecast of 6.1 percent for the Philippines, UBS now sees the local economy rising by only 5 percent.
The United States accounts for about 15 to 19 percent of the country’s total export earnings.
“We do not believe the growth shock emanating from the US will derail the Philippines’ long-term growth story. Nonetheless, as with most other economies in the region, there is reason to expect some fallout from a US recession in the next few quarters,” UBS said in a paper titled “Asean: It’s Hard to Defy Gravity,” which talked about its 2008 outlook for selected Southeast Asian economies.
The cut in its GDP growth forecast for the Philippines, however, was not as sharp as the reductions in the growth outlook on neighboring countries.
UBS has cut its 2008 growth forecast for Singapore by 3.3 percentage points to 3.5 percent from 6.8 percent. Malaysia’s outlook was slashed by 1.7 percentage points to 4.5 percent from 6.2 percent. Thailand’s was lowered by a similar 1.1 percentage points to 4 percent from 5.1 percent.
UBS’ growth forecast for the Philippines painted a bleaker environment compared with the government’s official target of between 6.3 and 7 percent.
The government said it remained optimistic about the attainability of its economic growth target. The National Economic and Development Authority earlier said that while the US was the Philippines’ biggest export destination, its share in the total earnings of Filipino exporters have shrunk over the years because of efforts to tap markets in Europe and Asia.
The Arroyo administration is confident the country’s exports will still manage to grow 8 percent this year, a figure it believes was respectable given a jittery environment offshore. The latest exports growth forecast was a reduction from the original projection of 12 percent.
The Neda expressed optimism that a GDP growth of 6.3 to 7 percent was realistic because there were economic developments that would offset the dragdown effects of a US recession.
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