MANILA (AFP) — Despite the global financial crisis the Philippine economy is more resilient now than it ever has been, President Gloria Arroyo said Friday.
She said economic reforms put in place in recent years such as increasing value added tax from 10 percent to 12 percent had enabled the economy to weather the current storm.
"What we are witnessing is a slowdown in the global economy and no country is insulated from it," she told members of the Manila Overseas Press Club over lunch at the presidential palace in Manila.
She said the global slowdown had not been helped by the spike in oil and food prices during the year.
Despite the weak global economy and economic growth this year at between 4.1 to 5.1 percent Arroyo said with some confidence that "our economy is more resilient today than ever before."
The Philippines last year recorded economic growth of 7.3 percent, its best in nearly three decades.
"The economic and fiscal reforms we have implemented in recent years have resulted in strengthening our macroeconomic fundamentals and our banking system," Arroyo said.
"As a result our economy is strong enough to withstand the external financial turmoil we are now witnessing."
Arroyo said the government was working on easing inflationary pressures and providing a safety net for the poor. Inflation is running at around 12 percent, compared with just over two percent last year.
With more than half the 90 million population living on less than two dollars a day the government has introduced a series of measures to ease the pain, such as one-off payments for electricity bills and food subsidies.
Arroyo said the government had been working to ensure reliable and stable food supplies in a country where rice is the main staple.
The Philippines, one of the world's major rice importers, has seen the price increase from 400 dollars a tonne to 1,200 dollar in just 12 months.
Arroyo admitted the oil and food price increases had put pressure on the government and its budgetary targets for the year.
She had been hoping to record a budget surplus this year but is now looking at a deficit of around 75 billion pesos (1.62 billion dollars).
The president said the government is to "fast track" financial reforms and accelerate spending on infrastructure and agriculture but did not go into specific details.
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