The Philippine government has again scaled down its growth forecasts for this year and next, noting the economy would not be spared from ill-effects of a possible recession in the United States, a senior official said.

From a revised 2008 growth projection of 5.5-6.4 per cent, the interagency Development Budget Coordination Committee (DBCC) now expects growth in the gross domestic product at 4.4-4.9 per cent, economic planning secretary Ralph Recto said.

It has also lowered its 2009 growth forecast to 4.1-5.1 per cent from 6.1-7.1 per cent, he said.

"The economic managers have accepted my suggestion to revise the Philippine economic growth projections downwards in the light of recent global developments," Recto, who heads the Neda, said in a statement.

Recto said absence of a US government package to bail out distressed banks would likely push the United States into recession.

"I did not expect the US congress to pass the bill on Emergency Economic Stabilisation Act of 2008 involving $700-billion bailout," he said. "But I expected the US Congress to pass an even better package. The move will have an effect of calming the financial market."

The US accounts for about 17 per cent of Philippine exports and hosts a significant number of Filipinos. Overseas Filipinos' income remittances to their families help drive the Philippine economy.

On the upside, Recto said, inflation is expected to slow down.

"The central bank expects inflation, which reached a 17-year high of 12.5 per cent in August, will drop to a single-digit rate in the first or second quarter of next year.

Recto said the budget deficit would not breach the target ceiling of 75 billion pesos for the year despite need for increased public spending to pump-prime the economy. He noted that the government recorded a deficit of 31.7 billion pesos in the period from January to August, leaving enough room for increased spending up to December.