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PCCI sees growth to slow drastically to 5.5% in ’08

08/06/2008

The country’s biggest trade group, the Philippine Chamber of Commerce and Industry (PCCI), expects the country’s gross domestic product (GDP) to grow by only 5.5 percent this year from last year’s 31-year high of 7.3 percent as rising oil prices affect overall growth.

PCCI chairman emeritus Donald Dee in an interview said the spiraling cost of petroleum products has significant impact on the consumer spending and profitability of businesses.

The government sees GDP growth of 5.7 to 6.5 percent this year. The local economy grew 5.2 percent during the first quarter.

“You will begin to see some slowdown in the consumer sector. We can’t do anything, we cannot fully adjust the wages because we have to benchmark with the other countries as well,” he noted.

Dee noted that similar to what is happening in the US and Japan, profits of the businesses are expected to go down substantially this year.

But he expressed hope the services sector will improve by 5 to 6 percent as against its traditional 2 to 3 percent growth.

Dee said the export sector is also showing positive growth although at a measly 5 to 7 percent.

“I think, we are managing better than other countries,” he said.

The PCCI executive believes that key to sustaining economic growth is the government’s subsidy in the area of infrastructure. “That infrastructure spending must be kept and hopefully, agriculture, especially rice production, will improve.”

Dee said the business group is also pushing the continued reduction of income taxes that would be lowered from 35 to 30 percent next year.

“Other countries have brought it down to 25 percent income taxes. To compensate, they are putting consumption taxes because it is easier to implement and puts the burden to the more affluent members of the society rather than to everybody especially the poor,” he said.

Dee explained that imposing lower income taxes make it easier for businesses to prosper which is crucial to creating jobs. Philexport News and Features