Thursday, 12 February 2009

Analyst forecasts better ’09 growth for Philippines despite crisis

BusinessWorld Online

A LOCAL ANALYST remains upbeat about the Philippines’ growth prospects, forecasting the economy to perform above official targets despite the global economic slowdown.

ATR KimEng Securities, Inc. economist Luz L. Lorenzo told a Security Bank-sponsored briefing yesterday that the Philippines would likely grow by 4.9% this year, up from last year’s 4.6% and better than the official target of 3.7-4.7%.

"This is premised on domestic demand benefitting from lower inflation, greater government spending, lower interest rates and stable remittances," she said.

International debt watchers Fitch Ratings, Standard & Poor’s and Moody’s have much lower expectations, ranging from 2-3.3%. The International Monetary Fund also has a 2.25% outlook.

Ms. Lorenzo said domestic spending would contribute more than three-thirds to gross domestic product, driving the growth despite a drop in demand for exports.

Latest government data showed a significant 40% plunge in exports last December as global demand dropped.

Growth in remittances, meanwhile, will stay steady as Filipinos abroad are mostly employed in "recession proof" sectors such as education and healthcare, she said.

"Healthcare and education are the pillars of the stimulus packages of developed countries" where migrant Filipinos are employed. "These are industries where jobs are being created instead of being lost."

"Remittances may slow down, [but] I don’t see it contracting sharply," she said, projecting a 5-6% growth in funds sent home by Filipinos working abroad.

Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo yesterday said a contraction in remittance inflows was unlikely. As of November last year, Filipinos had sent about $15.1 billion, a 15% improvement.

Ms. Lorenzo also projected a higher budget deficit this year due to increased spending as a result of the government’s P330-billion fiscal stimulus.

Her optimistic outlook, said Ms. Lorenzo, also rested on the government’s implementing its fiscal stimulus, which revolves around increased infrastructure spending, efficiently and as soon as possible.

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