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MANILA - The Aquino administration is keeping its economic growth target of five to six percent for this year despite the ongoing euro zone debt crisis.
Emerging from a meeting of the inter-agency Development and Budget Coordinating Committee, Socioeconomic Planning Secretary Arsenio Balisacan on Tuesday told reporters that the country’s economic managers had been contemplating on increasing this year’s growth target if not for the euro zone’s difficulties.
The DBCC sets the country's economic goals.
"Yes, we considered raising the target to 5.5 percent to 6.5 percent. But we decided to be conservative given the external economic woes," Balisacan said.
The Philippines enjoyed a 6.4 percent economic growth in the first quarter, the highest in Southeast Asian and second-fastest after China.
But Philippine exports to Europe account for 13 percent of the total, while remittances from the euro area comprise 17 percent.
"Europe's economic crisis could affect our economy in various ways especially in terms of exports and remittances," Balisacan said.
"Credit rating agencies also made some downgrade on Europe-based banks, making borrowing costs more expensive," he said.
Despite the euro crisis, domestic demand is expected to make up for some slack on the external economic front, Balisacan said.
"Looking at domestic demand, numbers are showing well. There is a lot of improvement. Personal consumption contributes about three-fourths of growth in the economy. There's much room there,” he said.
Another member of the DBCC, Budget Secretary Florencio Abad said the government will have to be prepared to create domestic demand in case such need arises.
"We will closely monitor that though we’ll not touch numbers. There are two pending measures in Congress as well as a lot of room improving absorption for government spending that will generate demand from within. If there is a need to further generate demand domestically, then we have to be prepared for that," he said.
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