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MANILA — The Philippine president has announced a 72 billion peso ($1.66 billion) stimulus package to cushion the economy as Asian governments step up efforts to ward off the global fallout from Europe's debt crisis.
President Benigno Aquino III said Wednesday that the world economic slowdown is already having some impact on growth in Asia, including the Philippines, and the government "is working overtime to make certain that we do what must be done to maintain our economy's momentum."
On Tuesday, Indonesia's central bank lowered its benchmark interest rate by a quarter percentage point to 6.5 percent to offset the impact of turmoil in financial markets and a slowing global economy.
Asia bounced back relatively quickly from the last global recession that was sparked by the 2008 financial crisis, helped in part by China's massive stimulus spending. But some economists say the region is not as well placed to respond to a new slowdown because inflation is high and a lot of fiscal ammunition has already been spent fighting the last crisis.
Aquino said that his government's additional spending this year includes 6.5 billion pesos ($149 million) for local infrastructure and poverty alleviation and 10 billion pesos ($230 million) to relocate squatters affected by floods and landslides.
Another 5.5 billion pesos ($126 million) will be spent on national infrastructure projects and 6.3 billion pesos ($146 million) to upgrade two of metropolitan Manila's light rail lines.
"This spending will provide added stimulus to our economy," he said in a speech at the Foreign Correspondents Association of The Philippines. "The stimulus will be spent on projects that will have high macroeconomic impact, and will help the poor."
The government's economic growth forecast for this year has been lowered to a range of 5 percent to 6 percent from the 7 to 8 percent expansion projected in January. Aquino said the target for next year is also 5 to 6 percent growth.
The effects of the stimulus will be felt not just at the end of this year but also in the first half of next year, Aquino said. The spending is being funded from savings and existing loans.
Last year, the Philippine economy galloped to its highest annual growth in more than two decades, expanding 7.3 percent on strong foreign trade and election campaign spending.
