Saturday, 16 May 2009

Positive signs boost confidence in Philippine economy

HOW FILIPINOS ARE PROVING THE IMF, WB, AND CREDIT RATING AGENCIES WRONG
http://www.gov.ph/index.php?option=com_content&task=view&id=2000557&Itemid=2

Manila (16 May) -- National Economic and Development Authority (NEDA) Officer-in-Charge Rolando G. Tungpalan said that the latest global and local indicators are helping to boost confidence towards earlier-than-expected economic recovery. He said overseas Filipino workers (OFW) employment remains strong, inflation rate is falling, and exports and construction are improving.

"The crisis is not over, but there are positive signs that boost our confidence on the Philippine economy," he said.

At the same time, he reiterated that even with these developments, "the government must pursue more rigorously the Economic Resiliency Plan (ERP) and push for legislation on the needed revenue measures towards improving the economy and usher in development for the Filipino people."

Tungpalan said "in terms of overseas employment, job prospects include 15,000 to 20,000 jobs for highly skilled Filipino workers in Guam, 60,000 in Saudi Arabia, and 20,000 in Qatar".

The NEDA official added remittances from OFWs for the year would be at least the same level with the 2008 level of US$16.4 billion, citing that remittance expanded by 4.9 percent in February.

"We have the number of layoffs for each month after the global crisis broke out in September 2008. In each month, we had layoffs of 10,000 to 11,000 workers, even 14,000 in March. But in the first half of April, the number steeply dropped to only around 1,000. And firms have begun to rehire their displaced workers, as in the case of Cebu," Tungpalan added.

Another boost to the economy is the rapid decline in inflation, which steadily climbed in 2008 due to high food and fuel prices and reached its peak in August of that year at 12.4 percent. From then on, inflation has been falling and hit 4.8 percent in April 2009, the lowest in 16 months. "It will continue to decline, averaging 3.5 percent for the whole year. This in turn will boost personal consumption, which is 70 percent of gross domestic product," he said.

Tungpalan said that the country is witnessing a return of growth of exports, which has been negative since October for year-on-year growth. Exports in March 2009 was 30.9 percent lower compared to exports in March 2008. But for the first time, there is growth on a month-on-month basis. Exports in March 2009 was 15.9 percent greater than in February 2009, a sign that Philippine exports is recovering.

Construction is holding up, thanks to government infrastructure projects and lower Pag-Ibig rates, which are fueling mass housing. Industry leaders have noted that government is now taking the lead in infrastructure projects and that the demand in low-income housing continues to be strong, according to the NEDA official.

He quoted Anthony Fernandez, the president of the Philippine Contractors Association, who said that projects before was "60 percent private-led and 40 percent government; now, it's around 60-70 percent government."

Tungpalan also referred to Filinvest president Joseph Yap, who said, "So far, we're not even seeing a dip (in sales)…The mass market is still quite strong." Filinvest Land Incorporated devotes around 70 percent of its projects to the mass market and is in fact hiking its capital spending by 30 percent.

"The SM Group of taipan Henry Sy is investing PhP25 billion in the local economy this year to expand its retail, real estate, shopping mall, hotel, and banking in anticipation of growing demand for its products and services. Also, AVIDA, the affordable housing arm of Ayala Land, will be spending for a PhP1.5 billion middle income condominium to address the increasing demand for low- to middle-income housing," the NEDA official added.

Others have begun to take notice of the resilience of the Philippines, according to Tungpalan. "One article from the New York Times cited that the country's gross domestic product growth is 'the most sustained improvement since the mid-1970s', taking note of OFW remittances which have held up so far, call centers and outsourcing and the government's fiscal reform," he said. (NEDA-PIA XI)

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