RP won't slip into recession - NEDA

MANILA, Philippines - With several sectors of the economy bouncing back after a brief slump over the past several months, the National Economic and Development Authority (NEDA) has boldly stated that the Philippines will not slip into a recession this year.

NEDA deputy director general Rolando Tungpalan, in a briefing at Malacañang shortly after the weekly Cabinet meeting, said that several bright spots in the economy coupled by the positive outlook of the international analysts have practically wiped out the doomsday scenarios about the economy going into a recession this year.

The NEDA, in its weekly report to the Cabinet about the impact of the global recession, cited several indicators to back up its optimism about the economy, including the good performance of the stock market and several other key sectors.

Active trading has pushed up the Philippine Stock Exchange index to 2,800 points, which Tungpalan said is a good indicator of strong economic activity.

Cement production has also gone up even as inflation has slowed down to 0.2 percent in July.

Tungpalan noted that the rise in cement sales was brought about by the increase in the sales of low to medium cost housing.

He also cited the increase in the sales of automobiles in spite of reports of belt tightening among the consumers.

International analysts also believe that the country is moving away from a possible recession.

Moody’s Investors Service has affirmed its positive outlook on the Philippine economy and even upgraded the country’s credit rating, mostly due to the high level of foreign reserves.

Overseas Filipino workers (OFWs) remittances continue to defy the projections of a slowdown with the steady inflow ensuring that there will be no contraction this year.

“Basically we are saying the global recession is coming to an end and some have said the beginning of the end,” Tungpalan said.

While the second quarter growth numbers are yet to be released, Tungpalan expressed confidence that the economy grew during the period.

Considering that there are several positive indicators supporting continued growth in the second half of the year, Tungpalan said that it is not likely that the economy would go into a recession this year.

Technically, recession occurs when there are two quarters of negative growth.

“If we look at the leading indicators that I pointed out – cement production expanding, automobile sales expanding, overseas remittances growing, positive confidence of consumer and business, we cannot see how one can talk of a sudden downturn in the second quarter,” Tungpalan said.

“The bottom line here is, as has been warned by those critical of our report, is that we are totally out of the recession and there are no signs that those who foretell gloom are right,” he added.

 In order to further support the growth of the economy, Tungpalan said that the country would be more aggressive in engaging the strong performing economies, particularly China, in order to draw more investments into the country.

Tungpalan pointed out that China has around $2 trillion in reserves and its government has directed its businesses to go out and invest in other markets.

“We should take advantage of one of the first movers to seize this very aggressive going out policy of China,” he said.

Though China already has a lot of investments in several infrastructure projects of the government, Tungpalan said that the country is looking to attract more hard investments from the Asian giant.

The government is also looking to expand the huge tourism revenue potential of China.

More government support would also go into the high-end, non-voice business process outsourcing sectors such as animation.

Tungpalan noted that the BPO sector continues to be a bright spot in the economy, generating several thousands in employment at any given time.

He said that 90,000 jobs are expected to be generated by the sector this year while revenues are expected to hit $5 billion to $6 billion.