Series of Oil Price Hikes Seen to Dampen Economic Growth
The series of oil price increases in the past months is likely to slash forecasted economic growth by one-half percent, according to Socioeconomic Planning Secretary Romulo Neri.
He said the projected economic contraction could be due to the fact that high-priced oil products can discourage consumption; thus, lower economic growth could be posted by year-end.
Based on forecasts set out by the National Economic and Development Authority (NEDA), the countrys economy, as measured by the gross domestic product (GDP), may expand by 5.9 to 6.1-percent this year.
However, with uptrend in pump prices weighing down on economic fundamentals, the growth may turn out just at a range of 5.4 to 5.6-percent.
Though oil prices do not have that significant inflationary impact, Neri noted that the trickle down effect could pull down economic growth on other aspects; such as on consumption or public spending and even in the planned expansion of businesses.
"High oil prices could have some dampening effect on economic growthwith costs pushed, it can discourage consumptionand eventually, it might even put damper on expansion capacity of businesses," he stressed.
In fact, until today, there are no clear signs yet that pump prices would soften soon with international prices still swinging from one high to another. …