MANILA, Philippines — The Philippine economy’s ability to avoid the contagion of the global economic crisis has been eroded by its dependence on exports, but income remittances from overseas Filipino workers (OFWs) may mitigate this, according to a United Nations report.
The worst, however, is yet to come, as the economy is expected to grow by no more than three percent this year, said the Economic and Social Survey for Asia and the Pacific 2009, published by the UN Economic and Social Commission for Asia and the Pacific (ESCAP).
As a result of the global financial crisis, the Philippine economy grew at a noticeably slower rate in 2008, at 4.6 percent, against 7.2 percent in 2007, said the ESCAP report, “Addressing Triple Threats to Development,” which was released Thursday in more than 20 cities across the region and in New York and Geneva.
The report analyzed the three global crises which have converged to threaten development in the Asia-Pacific — the economic crisis, fuel and food price volatility, and climate change.
It said the slowdown in economic growth in the Philippines was a result of a sharp contraction of exports that started in the last quarter of 2008, particularly of electronics which had been badly hit by the recession in the United States and other industrialized countries.
While domestic demand did not fall as sharply, the growth in private consumption, gross fixed investment and public consumption was slower in 2008 than the year before, the report said.
A bright spot in this gloomy picture has been the increase in money sent home by OFWs.
In 2008, the remittances reached $16.4 billion, 13.7 percent higher then in 2007. But the growth rate in remittances decelerated to 0.1 percent in January 2009 compared to the same time last year, reflecting the impact of the recession on OFWs in the US.
Noting that the government had announced a fiscal stimulus package of P330 billion, or 4.6 percent of GDP, ESCAP said fiscal resources were limited and increased budget deficits would eventually need to be addressed.
It said stimulus packages should be an opportunity to not only reinvigorate the economy in the short term, but address long-term issues by investing in food and energy security, social safety nets, disaster risk reduction, and green technology.
“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 ESCAP said.
Headquartered in Bangkok, the ESCAP is the largest of the UN’s five regional commissions and is the only intergovernmental forum covering the entire Asia-Pacific region.
The report provided a regional perspective as well as country-specific analysis, outlining ways in which the region’s economies could move forward toward a more inclusive and sustainable growth path.
The report pointed out that the triple crises were interlinked and were actually reinforcing the impacts of each.
It noted that the number of the poor in Asia-Pacific — already two-thirds of the global total — was likely to increase as a result of the economic crisis and rising unemployment.
“Impacts of the crises have hit the world’s poor the hardest. It is clear that a more inclusive model for economic growth is required to address their needs,” Dr. Noeleen Heyzer, ESCAP executive secretary, said in a statement.
“This requires setting up social protection systems that increase income security and free up the spending power of middle and lower income people who drive the economy,” she said.
Heyzer said the report’s findings and recommendations would serve as a guide to policymakers “through the uncertain times ahead.” –Cynthia D. Balana, Philippine Daily Inquirer
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