26 March 2009
Press Release No. G/20/2009- PHL
Philippines Dependence on Exports Hampers 2009 Economic OutlookESCAP’s annual survey analyses region’s challenges, proposes solutions
Bangkok (UN Information Services) – As a result of the global financial crisis, the Philippine economy grew at a noticeable slower rate during 2008, at 4.6 per cent - down from 7.2 per cent in 2007. However, the worse is yet to come – the economy is expected to grow by no more than three per cent this year, according to the Economic and Social Survey of Asia and the Pacific 2009.
This year’s edition of the flagship publication of the United Nations’ regional arm – the Economic and Social Commission for Asia and the Pacific (ESCAP) – is entitled "Addressing Triple Threats to Development”. It analyzes the three global crises which have converged to threaten development in the Asia-Pacific region: the economic crisis, fuel and food price volatility, and climate change. The Survey provides a regional perspective as well as country-specific analyses, outlining ways in which economies in the region can move forward in unison towards a more inclusive and sustainable development path.
The Survey states that the slowdown in GDP growth in the Philippines is a result of a sharp contraction of exports started in the last quarter of 2008 - a consequence of the country’s linkages to global supply chains in the electronic industry, which have been badly hit by the recession in the United States and other industrialized countries.
While domestic demand did not fall as sharply as exports did, the growth in private consumption, gross fixed investment, and public consumption was slower in 2008 than the year before.
A bright spot within this gloomy picture is the increase in money sent home from Philippine citizens working abroad. In 2008, remittances totalled US $16.4 billion, which is 13.7 per cent higher then in 2007. However, the growth rate in remittances decelerated to 0.1 per cent in January 2009 compared to the same time last year, reflecting the impact of the recession on immigrant workers in the United States.
To support the economy in the face of the deepening crisis, the central bank of the Philippines cut its policy rate on three occasions between December 2008 and mid-March 2009, from 8 per cent to 6.75 per cent. In addition, in January 2009, the government announced a fiscal stimulus package of P330 billion (US $6.5 billion, or 4.6 per cent of the GDP) which aims at upgrading infrastructure, providing seed funding for small enterprises, boosting social protection, and creating jobs.
The Survey emphasizes that, in regards to fiscal stimulus packages such as the one in the Philippines, fiscal resources are limited and today’s increases in budget deficits will eventually need to be addressed. It is thus critical to be selective in the use of public funds. In particular, spending on policies that promote the long-term sustainability of energy and food markets as well as spending that addresses the deficiencies of current social protection systems are a valuable investment for the future while helping to support domestic demand in the short-term.
****The Economic and Social Survey of Asia and the Pacific 2009 is available online from 0500 GMT/1200 Bangkok on 26 March at: http://www.unescap.org/survey2009/index.asp
For more information, please contact:
Mr. Alberto Isgut
Economic Affairs Officer
Macroeconomic Policy and Development Division, ESCAP
Tel.: (66) 2 288 1773
E-mail: isgut(at)un dot org
Mr. Bentley Jenson