RP economy to grow by 4.3% this year

CEBU, Philippines – Despite the pessimistic outlook of some economists regarding the predicted slowdown of the Philippine economy this year, an official from the Philippine Institute for Developmental Studies forecasted a possible 4.3 percent growth for the country’s gross domestic product (GDP) this year.

Recently, a joint discussion on the Non-Tariff Measures, Global Financial Crisis and the Philippine Outlook for 2009: Opportunities and Challenges was held at the Golden Prince Hotel and was hosted by the Philippine Institute for Developmental Studies (PIDS) in partnership with the Cebu Chamber of Commerce and Industry (CCCI) and was participated by representatives from Cebu’s business sector as well as the academe.

PIDS president Josef Yap presented his outlook for 2009 and said that his prognosis for the Philippine economy is anchored on lower inflation rate that will be at five to six percent this year as opposed to 9.3 percent last year as well as the stable remittances in peso terms, contained slowdown in manufacturing sector specifically the electronic segment and the continued public investment programs.

“Last year the GDP growth was at 4.6 percent and this is a god sign that our momentum for last year will still be maintained. But the problem will lie ahead on 2010 because if the global financial crisis prolongs, and we have not done something about it then we will not have enough fiscal revenue to maintain our fiscal resiliency plan. The decrease in our export sector may already permeate the whole economy and this will happen because everyone will focus on the coming elections and will no longer mind policies that can sustain growth,” said Yap.

He said that the Philippine economy is not as reliant on exports and foreign direct investments (FDIs) and our overseas Filipino workers (OFW) remittances is the key factor to maintaining the growth of our economy however this has to be strengthened by fiscal policies.

Yap said that for our OFW remittances this year, it is predicted to stabilize with zero growth reaching to $16.4 billion however he said that the impact of the crisis is cautioned by the peso depreciation and so the peso equivalent for the remittances will be increased at around P250 billion amounting to a total of P800 billion this year.

He said that for the global policy response and risks, countries in East Asia should inject liquidity and confidence into the financial system through government bailouts and deposit guarantees.

However he said that there is still uncertainty about the length and the depth of the recession so the impacts of these actions may not do enough to offset the crisis.

As for the domestic policy responses that will help international bailouts, there should be a loosened monetary policy that will cut on interest rates as well as fiscal stimulus or what the government now calls as their economic resiliency plan that is essential to continually attract an influx of foreign investors and strengthen the confidence of existing investors.

But despite his seemingly positive outlook for the economy, Yap underscored that the condition of the Philippines will still be problematic.— Rhia de Pablo