RP LIKELY TO AVOID RECESSION - NEDA
MANILA, JULY 23, 2009 (STAR) By Marvin Sy - With recent forecasts of major world economies moving out of recession and the revised outlook on the US economy, the Philippine government has become even more confident the country would avoid a recession this year.
National Economic and Development Authority deputy director general Rolando Tungpalan, in his presentation before the Cabinet as part of the regular global recession impact monitoring news reporting, noted that the International Monetary Fund has indicated that the global economy is now moving out of recession.
The United States Federal Reserve has also upgraded its outlook on the US economy from a contraction of 1.3-2 percent to a slimmer negative growth of 1-1.5 percent.
Tungpalan also cited a report released by a US-based independent research firm Global Source, which indicated that the Philippines will not go into recession.
The latest data on overseas Filipino workers remittances coming from the Bangko Sentral ng Pilipinas also showed continued growth in this sector.
OFW remittances in May this year grew 3.7 percent, contrary to predictions made by several analysts that this would suffer from a contraction this year.
Tungpalan noted that the BSP expected a flat growth for OFW remittances this year in spite of the global economic slowdown. In contrast, the World Bank and IMF both forecast a four-percent contraction.
“So this clear evidence of positive developments do point out that recession is out of the question,” Tungpalan said.
Tungpalan cited Several other external factors to back up the government’s optimism on attaining its 0.8-1.8 percent growth target for this year.
He noted that China’s impressive 7.9-percent growth in the second quarter provides a huge opportunity for the Philippine economy in terms of expanding trade and investments.
China is among the major trading partners of the Philippines and with relations between the two countries continuing to be very strong, the country hopes to ride on the strength of China to move the economy forward.
“China continues to post strong growth. We reiterate the importance of engaging China for more trade, investment and tourism,” Tungpalan said.
In the domestic front, Tungpalan cited the positive outlook on retail trade, specifically the growth of car loans by the banks and the expansion of the major malls in the country.
Tungpalan said auto loans grew 48 percent in May, up from a negative 6.6 percent growth last year.
The SM Group of Companies also continues to expand its operations in the country with its plan to open four new malls this year.
“We expect positive growth. We will not adjust our own expectations until we see the second quarter GDP performance which will be released on Aug. 27,” Tungapalan said.
'RP not likely to slip into recession' By Ma. Elisa P. Osorio Updated June 02, 2009 12:00 AM
MANILA, Philippines – The Joint Foreign Chambers of the Philippines (JFC) is not expecting the economy to slip into a recession this year, thanks to the country’s strong remittance inflows and revenues from the information technology (IT) services sector.
In a report released yesterday, the seven-member chamber said money sent home by overseas Filipino workers (OFW) and revenues from the IT-enabled services sector will support the continued growth of domestic consumption, allowing the Philippines to show positive gross domestic product (GDP) growth in 2009.
“There is a chance of mild recession should global recovery be slow and remittance and service revenue flows deteriorate more than expected. But this seems unlikely,” the report said.
“The archipelago is the leader in East Asia in the deployment of overseas workers and in the IT-enabled services sector,” it added. Last month, consulting firm Ovum Plc. said government initiatives for technology adoption will drive the growth of the country’s IT sector.
OFW remittances hit a record $1.47 billion in March from $1.3 billion recorded in the previous month. Its growth rate, however, slowed to 3.04 percent as traditionally strong remittance sources, such as the United States and the Middle East, contracted or were flat.
For the full year, the Bangko Sentral ng Pilipinas (BSP) is expecting a flat growth in remittances, while the International Monetary Fund (IMF) projected a 7.1-percent decline. However, JFC said the growth of remittance inflows remain positive for the first three months of the year at 2.6 percent.
“We expect remittances to return gradually over several years to 2008 volumes and to grow in rough proportion to global economic recovery,” JFC said. Last year, remittances increased 14 percent to $16.4 billion, accounting for 10 percent of GDP.
Meanwhile, JFC said the upcoming national elections will also boost the country’s GDP by less than one percent.
“Election spending should have a booster shot effect on GDP. But any recurrence of serious political intability could be a negative tipping point. Such risks require vigilance and avoidance of complacency,” the report said.
JFC’s position in the report remain unchanged even as the National Statistics Coordination Board (NSCB) reported a 0.4-percent GDP growth for the first three months of the year, the lowest since the Asian financial crisis.
The latest figure was much worse than the government’s 1.8 to 2.8 percent quarterly projection. But while the country is still posting positive growths, NSCB Secretary General Romulo Virola said the Philippines is already on “the brink of recession” not just based on GDP rates but on worrisome May to June leading economic indicatores.
The indicators include the consumer price index, electricity consumption, exchange rate, hotel occupancy rate, money supply, number of new business incorporations, stock price index, terms of trade index, total imports, tourist arrivals and wholesale price index.
Chief News Editor: Sol Jose Vanzi
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