Sunday, 1 February 2009

Philippine economy seen growing over 4% this year amid crisis

Roderick T. dela Cruz
The Manila Standard

A leading Filipino economist yesterday said the country’s gross domestic product economy will manage to rise above 4.0 percent this year, despite the deterioration in financial markets that forced the International Monetary Fund to revise its global growth outlook to its lowest rate since World War II.

“While we do expect a further slowdown to sub-4 percent in the first quarter of 2009, I still think domestic demand, spurred by high double-digit spending, residential construction, business process outsourcing and non-metallic mineral products should again be able push GDP growth to our forecast of 4.1 percent for the year,” said Victor Abola, executive director of First Metro Investment Corp. -University of Asia & the Pacific Capital Markets Research.

The National Statistical Coordination Board earlier reported that the GDP grew 4.6 percent in 2008, but there were worries that growth this year will be much slower, with the IMF predicting the global economy will come to a virtual halt.

World growth is projected to fall to just 0.5 percent in 2009, its lowest rate in 60 years, according to the IMF.

Abola said remittances and the devaluation of the peso would help support consumer spending in the Philippines this year.

He noted that in 2009, remittances in current peso terms, had a substantial impact on consumption spending, which rose 4.5 percent.

“In dollar terms, these were up by some 13.6 percent but the average depreciation of 12.3 percent of the peso added the extra vigor to the consumer sector,” he said.

Abola cited studies by the University of Asia and the Pacific indicating that remittances had a multiplier of 2.5 using input-output analysis. This means that for every peso of remittance, a total of P2.50 in income is generated, he said.

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