Palace: RP not heading toward recession

May 29, 2009 1:46 pm 

By Joel C. Atencio

MANILA, May 29 – President Gloria Macapagal Arroyo and her economic managers dispelled fears that the Philippines is heading toward recession, saying "we are now away from the freefall of the first quarter."

“The road to recovery may take a long time, but at least we are away from the freefall that was characteristic of the first quarter (economic condition),” said Deputy Director General Rolly Tungpalan of the National Economic and Development Authority (NEDA) during a press briefing at the New Executive Building on Friday afternoon.

“We are not in a recession and the agencies cited in the reports made no pronouncements to that effect. The technical definition of a recession is when the economy goes to two consecutive quarters of year-on-year negative growth or contraction. This is not something that the Philippine economy is in the middle of right now,” Undersecretary Gary Olivar, Presidential Spokesman for the Economy, said.

Compared with its neighbors, the Philippines’ GDP (gross domestic product) growth of 0.4 percent and the GNP (gross national product) of 4.4 percent “fare very well,” Tungpalan said.

The 0.4 percent growth was realized through the expansion of the agriculture and fisheries sector of 2.1 percent, which, however, was offset by the contraction of the industry sector at negative 2.1 percent, Tungpalan said, adding that the services sector grew at 1.4 percent.

The industry sector contracted due to the global economic slump. Within the industry itself, the manufacturing subsector contracted by 7.3 percent.

But a lot of uncertainties, higher prices and bleak business sentiment had happened between January and March this year, he said.

He said the wide gap between GDP and GNP of 4 percent was due to overseas remittances, which expanded by 40 percent, as reported by the Bangko Sentral.

Personal consumption expenditure expanded by 8 percent. The other plausible reason was households began to save more.

Tungpalan said the Philippines modest growth fared well with its neighboring countries, citing Singapore’s minus 10.1 percent; Taiwan minus 10.2 percent; Hong kong minus 7.8 percent; Thailand, minus 7; Malaysia, minus 6.1 percent.

While China posted 6.1 percent growth during the first quarter, it was a slowdown considering that it used to grow by 10 to 11 percent.

On the projected between 3.1 and 4.1 GDP annual growth, NEDA Director-General Ralph Recto said that “we simply have to work harder over the next three quarters and strive for a 4.1 to 5.4 percent growth in the succeeding quarters to achieve the 4.1 percent year-on-year growth. We need to work harder with the support and cooperation of all sectors.”

“We do not see us going to a recession based on the April and May bi-weekly global recession impact news. You will recall that we used to call it global recession impact monitor but since April and May when business and consumer confidence and other indicators started showing signs of bottoming out we converted this into GRIN. These are events that took place after March,” he said.

Deployment of overseas Filipino workers (OFWs) of 354,000 in the first quarter of 2008 expanded to 368,000 during the same period this year, a big jump in the number of Filipino workers abroad.

“We also see a slowing down in the contraction of exports and imports. This is improving further because our economic resiliency plans (ERPs) are delivering on targets,” Recto said. In the first quarter, the infrastructure agencies “were putting papers together getting contracts on the ground so the real spending is taking place this quarter and in my meetings with the various departments, particularly Department of Public Works and Highways, they expect to deliver 90 percent for the first semester. Which is really what ERP is all about,” Tungpalan said.

With consumer and business confidence improving in May we do not see why the April-June performance would be worse than the first quarter performance. Business confidence is improving. The recovery may take some time but at least we are away from the freefall that was characteristic in the first quarter this year,” Tungpalan said. (PNA)

RMA/JCA

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