Strong spending by government boosts Philiippine economy

This is from the Financial Times. No doubt there will be somewhat of a slowdown this year especially with a higher peso. Exports will be more expensive and demand may be lower from countries such as the U.S. The higher dollar will also mean that when expatriates send remittances back home in U.S. dollars they will buy fewer pesos. Even so, growth looks not to be all that bad, certainly no depression. Perhaps Arroyo's continuing rule is depressing enough ;).

Strong spending by Manila boosts economy
By Roel Landingin in Manila
Published: February 1 2008 02:00 Last updated: February 1 2008 02:00
The Philippine economy grew at an annual rate of 7.3 per cent last year, recording its biggest expansion in 31 years thanks to stronger consumer and government spending.
But yesterday's gross domestic product data came as the country's central bank cut its main lending rate by 25 basis points to pre-empt the expected drag on the economy of a slowdown in the US.
Almost a fifth of Philippine exports go to the US, its biggest trading partner.
Last year's better than expected growth came as higher revenues from taxes allowed the Manila government to increase outlays for public works by almost a third.
Private-sector investments in construction and durable equipment also grew while personal consumption rose, buoyed by remittances from overseas Filipinos and falling unemployment.
Government planners, however, expect growth to ease this year to 6.3-7 per cent.
Margarito Teves, the finance secretary, said yesterday that the Philippines depended less on the US economy than it used to.
"The latest indications are that there is increasing decoupling between the Philippine and US," Mr Teves told the Financial Times.
But he said the government was nonetheless preparing a stimulus package to lessen the impact of a US downturn. This will include a ramping up in infrastructure spending and cash grants to extremely poor households.
The government is also planning to spend 60 per cent of its infrastructure budget for this year in the first four months.
Jose Salceda, an adviser to President Gloria Macapagal-Arroyo, earlier this week proposed a stimulus plan that would also see the government slash income taxes. But Mr Teves said that plan had been turned down because "we didn't want to weaken our revenue effort as that will hurt our ability to spend later"
He also said the government was still sticking to its plan to achieve a balanced budget this year, ending a decade of fiscal shortfalls.
Government economists have said that a 1 per cent decline in US economic growth will translate into a 1.9 percentage point cut in Philippine growth.
However, more recent estimates from the World Bank and the International Monetary Fund showed that the adverse impact was much less, at only 0.2-0.9 per cent, Mr Teves said.
Copyright The Financial Times Limited 2008