The country’s GDP is estimated to slow down to 4.2% in 2003 from 4.6% growth in 2002.

The agriculture, fisheries and forestry sector is expected to slow down to 2.8% from 3.5% due to a mild dryspell throughout the first half of the year. This year, government is prioritizing its focus on rice, corn, coconut, coffee, sugar and fisheries.

Industrial sector expansion is projected at 3.6% with continued growth in exports to ASEAN neighbors. Moreover, housing construction activities will benefit from lower interest and equity requirements under the housing loan program of government financial institutions. With government’s shift in focus to the micro segments of the economy, lending to small and medium enterprises is likewise expected to contribute to manufacturing production. Also, the output from the Malampaya natural gas project is also expected to contribute to industrial production.

Services sector growth is estimated at 5.1% since bank lending is expected to improve with the disposal of their non-performing assets through asset management companies. At the same time, telecommunication companies face reduced demand in their fixed line segment. On the other hand, the call center business is expected to take advantage of the country’s edge in terms of our English-speaking workforce. Opportunities for travel and tourism remain upbeat despite negative advisories from other countries with the Visit Philippines 2003 campaign. On the other hand, the proposal to declare open skies for air cargo, the pursuit of mass transit projects, and the plan to open nautical highways are pluses for the transportation sector, not to mention the delayed opening of the Ninoy Aquino International Airport Terminal 3.

Overseas remittances are expected to push GNP growth up to 5.0% despite expected delays in the early part of the year due to the pending amendments to the anti-moneylaundering law and possible conflict in the Middle East, particularly in Iraq.

Inflation is expected to remain stable at 3.1% in 2003 from the same rate in 2002 despite strict monitoring of smuggled agricultural imports such as fruits and vegetables, and expected hikes in electricity rates and water tariffs in Metro Manila. Oil prices too are expected to jack up in the event of a war over Iraq, but government has imposed measures to maintain minimum fuel product stocks of 15 to 30 days. Oil companies already factored in the cost of fuel additives to their pump prices in compliance with the Clean Air Act early in the year. A higher exchange rate will also hike fuel pump prices as well as transport fares.

Prospects for cutting down the country’s jobless rate remain dim with the slowdown in approved investments and overall exports. Overall unemployment rate is expected to worsen to 12.0% from 11.4% since the amount of net jobs generated is simply overwhelmed by more entrants into the workforce. The construction and services sectors are expected to generate more new jobs in 2003. The agriculture sector’s capacity to generate new jobs will be adversely affected by a mild El Niño. While demand for nurses and caregivers from overseas continue to remain high, some OFWs are expected to return home due to loss of employment opportunities because of nationality restrictions in the Middle East.

With economic difficulties in the United States, Japan and the European Union, the country’s source of trade expansion will remain intraregional, boosted by the impact of the 0%-5% tariffs under the AFTA-CEPT. The slowdown in exports and imports will bring the trade gap to less than US$3.0 billion in 2004.