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RP 2008 growth may be weakest in 7 years

January 22, 2009

MANILA, Philippines -- The Philippine economy may have grown at its slowest pace in seven years in 2008, dragged by high inflation and the impact of the global economic downturn, a senior government official said Thursday.

Dennis Arroyo, head of the policy planning office at the economic planning agency, told reporters that the economy expanded 4.2 percent to 4.5 percent last year, after hitting a more than three-decade peak of 7.2 percent in 2007.

The low end of the government's annual growth forecast was the slowest since 2001, when the economy grew just 1.8 percent.

"The slowdown is due to two crises, the oil and food crisis which hit the Philippines in the first half, and the global recession in the last quarter," Arroyo said.

The official gross domestic product (GDP) numbers are set to be released on Jan. 29, the same day the Philippine central bank announces its monetary policy decision.

Economic output in the three months to December likely slowed to 3.6 to 4.4 percent from a year ago because of a broad-based slowdown in the economy, Arroyo said.

The Philippine government had set a 4.1 to 4.8-percent growth target for 2008, and it had forecast a 4.6-percent expansion in GDP in the fourth quarter on hopes that brisk Christmas spending and lower inflation would underpin consumption.

Annual inflation hit its slowest pace in nine months in December at 8.0 percent, after reaching a near 17-year peak of 12.5 percent in August, due to a sharp drop in food and fuel prices.

Socio-economic planning chief Ralph Recto said earlier this month the country could hit the high end of its 3.7 to 4.7-percent growth target this year if a P330 billion ($7.0 billion) fiscal stimulus package was implemented on time.

Philippine officials want to frontload spending in the first half of the year to protect the economy from the ravages of the global economic crisis, which is expected to depress exports and sour remittances from Filipinos working abroad.

($1 = P47.30)

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