Bank sees recession for RP

NEDA official disputes World Bank warning
 
The World Bank predicted on Monday that the Philippines was likely to slip into “outright recession” this year because scenarios for recovery of the global economy remained uncertain, but a top Filipino economic manager belittled the warning.

“Surely, there [would be] no recession. Resiliency will beat recession,” said Rolando Tungpalan, the deputy director general of the National Economic and Development Authority (NEDA).

“They [World Bank officials] tend to be more cautious,” he added.

Tungpalan said the government remained confident to hit the 0.8-percent to 1.8-percent growth projection this year.

In its report “Global Development Finance 2009: Charting a Global Recovery” released also on Monday, the World Bank projected the Philippine economy, as measured by gross domestic product (GDP), to contract by 0.5 percent this year.

It earlier projected a 1.9-percent GDP for the Philippines this year from an earlier forecast of 3 percent.

GDP refers to the total value of goods and services produced in a country in a year.

The World Bank said that GDP for the East Asia and Pacific region was expected to revive over the course of late 2009 and into 2010, “though for several countries, including Malaysia, Thailand and the Philippines, outright recession is anticipated this year.”

The bank expected GDP in the region to grow 5 percent, while global growth is anticipated to be negative, with an expected 2.9- percent contraction of global GDP in 2009.

Local outlook

The National Statistical Coordination Board earlier warned that the Philippine economy was teetering on recession, as the leading economic indicators from April to June breached the negative territory confirming the “all too real threat to a recession.”

The statistical board’s indicators showed a negative 0.195 in the second quarter from a revised positive 0.045 in the first quarter.

In the first quarter of the year, the GDP fell to a 10-year low of 0.4 percent from 3.9 percent in the same period last year.

On a seasonally adjusted quarter-to-quarter basis, the economy contracted by 2.3 percent, the lowest for the past 20 years.

With the worse-than-expected first-quarter economic growth results, Socioeconomic Planning Secretary Ralph Recto, also the director general of NEDA, said the economy was suffering from a “mild recession.”

Benjamin Diokno, economics professor at the University of the Philippines and Budget secretary under then-President Joseph Estrada, told The Manila Times that the economy was on a “contraction mode.”

He said that the second-quarter growth would be even “worse.”

Diokno added that the eco­nomy has entered negative territory, noting that the per capita GDP declined by 1.5 percent and personal consumption expenditure by 1.1 percent.

With the 0.4-percent GDP from January to March, the Development Budget and Coordination Committee (DBCC) revised for the third time the economic growth target to 0.8 percent to 1.8 percent from 3.1 percent to 4.1 percent this year.

2010 prediction

For 2010, the World Bank projects a GDP of 2.4 percent and for 2011, 4.5 percent, for the Philippines.

Its projections were lower compared to the DBCC’s forecast of between 2.6 percent and 3.6 percent next year and 3.8 percent and 4.7 percent in 2011.

The World Bank said that the recovery across the region is expected to begin in the second half of this year and into 2010, reflecting substantial fiscal stimulus in China and a modest recovery of export demand in rich countries.

But the lender said that the turnaround is expected to be gradual, with regional GDP forecast to increase by 6.6 percent in 2010 and 7.8 percent by 2011.

“The East Asia and Pacific region has felt the full brunt of the crisis because of its close trade links with high-income countries and because of declining investment as well as a drop in exports and industrial production,” the World Bank said. –Darwin G. Amojelar, Senior Reporter, Manila Times