RP likely to avoid recession - NEDA

By Marvin Sy Updated July 23, 2009 12:00 AM

MANILA, Philippines - With recent forecasts of major world economies moving out of recession and the revised outlook on the US economy, the Philippine government has become even more confident the country would avoid a recession this year.

National Economic and Development Authority deputy director general Rolando Tungpalan, in his presentation before the Cabinet as part of the regular global recession impact monitoring news reporting, noted that the International Monetary Fund has indicated that the global economy is now moving out of recession.

The United States Federal Reserve has also upgraded its outlook on the US economy from a contraction of 1.3-2 percent to a slimmer negative growth of 1-1.5 percent.

Tungpalan also cited a report released by a US-based independent research firm Global Source, which indicated that the Philippines will not go into recession.

The latest data on overseas Filipino workers remittances coming from the Bangko Sentral ng Pilipinas also showed continued growth in this sector.

OFW remittances in May this year grew 3.7 percent, contrary to predictions made by several analysts that this would suffer from a contraction this year.

Tungpalan noted that the BSP expected a flat growth for OFW remittances this year in spite of the global economic slowdown. In contrast, the World Bank and IMF both forecast a four-percent contraction.

“So this clear evidence of positive developments do point out that recession is out of the question,” Tungpalan said.

Tungpalan cited Several other external factors to back up the government’s optimism on attaining its 0.8-1.8 percent growth target for this year.

He noted that China’s impressive 7.9-percent growth in the second quarter provides a huge opportunity for the Philippine economy in terms of expanding trade and investments.

China is among the major trading partners of the Philippines and with relations between the two countries continuing to be very strong, the country hopes to ride on the strength of China to move the economy forward.

“China continues to post strong growth. We reiterate the importance of engaging China for more trade, investment and tourism,” Tungpalan said.

In the domestic front, Tungpalan cited the positive outlook on retail trade, specifically the growth of car loans by the banks and the expansion of the major malls in the country.

Tungpalan said auto loans grew 48 percent in May, up from a negative 6.6 percent growth last year.

The SM Group of Companies also continues to expand its operations in the country with its plan to open four new malls this year.

“We expect positive growth. We will not adjust our own expectations until we see the second quarter GDP performance which will be released on Aug. 27,” Tungapalan said.