(Updates with comment from economist in fourth paragraph.)
Oct. 11 (Bloomberg) -- Philippine President Benigno Aquino approved a 72.11 billion-peso ($1.7 billion) plan to boost the economy, becoming the first Asian leader outside Japan to introduce a stimulus package this year as global growth falters.
The president has approved the package of spending measures, Budget Undersecretary Laura Pascua said in a mobile-phone text message today, without elaborating.
Europe’s debt crisis and an unemployment rate above 9 percent in the U.S. have damped growth in emerging markets, prompting some central banks to start easing monetary policy and governments to increase spending to shield their economies. Indonesia unexpectedly slashed borrowing costs today, joining Brazil, Turkey and Pakistan in cutting interest rates this year.
“If this package allows them to get spending out the door, then it’s going to be useful, especially since external demand may soften further,” said Matt Hildebrandt, a Singapore-based economist at JPMorgan Chase & Co. “But it is important to realize that if global demand falters further, even a timely and well-designed fiscal package is probably not going to allow the Philippines to avert a slowdown.”
Indonesia is preparing a stimulus package that it may implement in the first half of 2012 should the global economy worsen and hurt growth in Southeast Asia’s largest economy, the government said last month. Malaysian Prime Minister Najib Razak announced in the country’s annual budget last week that he will distribute cash to low-income families, raise wages for civil servants and boost spending on transportation as overseas demand wanes and elections loom.
The Philippine Stock Exchange Index rose 1.7 percent to 4,109.27 today, the highest level since Sept. 21. Aquino’s spokesman Ricky Carandang said yesterday the president will formally announce the stimulus package on Oct. 12.
“Fiscal stimulus is indeed necessary to further bolster domestic demand and increase the absorptive capacity of the economy,” Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said today.
Philippine exports slid the most since 2009 in August, falling 15.1 percent from a year earlier, a report showed today. Growth in the $200 billion economy slowed for a fourth straight quarter to 3.4 percent in the three months through June.
The government had a budget surplus in August, helping narrow the eight-month shortfall to 34.5 billion pesos from 228.1 billion pesos in the same period in 2010. Aquino plans to narrow the budget deficit to 2.6 percent of gross domestic product, or about 286 billion pesos, in 2012, from a target of 3 percent, or about 300 billion pesos, this year.
--Editors: Stephanie Phang, Paul Panckhurst
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