Huge population to shield RP from recession–NEDA

THE Philippines’ huge population growth may shield the economy from contracting as domestic demand would boost growth, a high-ranking official of the National Economic and Development Authority (NEDA) said.

Socioeconomic Planning Secretary Ralph Recto said the economy, as measured by gross domestic product (GDP), would be driven by domestic demand, particularly private and public spending.

According to the Bangko Sentral ng Pilipinas, the average consumer spending of Filipinos from 1995 to 2008 was 5 percent.

“All I’m saying there’s value to having a big domestic market. The Philippines has a 90-million market,” Recto said.

As of last year, the number of Filipinos reached more than 88 million, with an annual population growth rate of around 2.3 percent—the fastest in the region.

The Arroyo administration has been advocating the natural family planning method and left the decision to local officials in determining their policies on how to contain an exploding population growth.

But economists and multilateral agencies had been saying that poverty and hunger have worsened due to rising population.

Recto said the domestic demand would offset the anticipated contraction of exports, which is expected to contract between 13 percent and 15 percent.

Earlier, a study by the International Finance Corp. (IFC) and the World Resources Institute, showed that business interest in low-income Filipinos comprising the so-called base of the economic pyramid (BOP) is on the rise.

Comprising 30 percent of the Philippine population, the BOP market spends its money largely on mobile phones, pharmaceutical products and information and communication technology, the study said.

The report estimates the domestic BOP market to comprise 23.6 million Filipinos who live in relative poverty but have a combined purchasing power of $13.09 billion.

Among those that have begun targeting this market include multinationals, big home-grown companies and small entrepreneurial ventures and social entrepreneurs.

The economic managers are set to slash the economic growth this year to 3.1 percent and 4.1 percent this year, lower than the official target of 3.7 percent to 4.4 percent.

A proxy for economic output, GDP refers to the total value of goods and services produced in a country in a year.

For this year, the NEDA said the services sector would drive the economy, growing 3.3 percent to 4.1 percent, while agriculture would expand between 3 percent and 3.6 percent. The industry sector will expand at a slower 2.8 percent to 4.3 percent.

The Asian Development Bank cut the country’s GDP growth forecast to 2.5 percent this year while the World Bank and the International Monetary Fund expect expansion to slow to 1.9 percent and 2.25 percent, respectively.
–Darwin G. Amojelar, Manila Times