Govt admits concern but disputes WB

Malacañang conceded on Tuesday that there was cause for concern over a World Bank prediction that the Philippines would slip to “outright recession” this year, even as the Finance secretary rejected the idea.

“That is their [World Bank] view to the extent that their view follows the kind of decision they made for the Philippines, and we would be concerned,” said Gary Olivar, deputy presidential spokesman for economic affairs. “But certainly, you know they have every right to put interpretation in the set of facts we look at that maybe different from ours.”

Despite the World Bank’s projection, Olivar said the Philippines fared better compared to its Asian neighbors, some whom were seeing bigger contractions economically.

“Others are projected to contract by around 2.5 percent to 4.5 percent a year, [and] so within that growth, we are certainly the best performing . . .”

Olivar said the government credited the continued inflow of remittances from overseas Filipino workers (OFWs) for keeping the country afloat in troubled times.

He added that the Philippines was better off economically, because the banking system remained healthy and the central bank’s monetary policy responded well to current conditions.

“Number three [reason], the ability of the government to spend on the economic stimulus and assistance using the fruits of tax that we collected over the years,” Olivar said.

Lastly, the country was in a good position because the world economy was already poised to recover just when the recession was beginning in the Philippines, he explained.

“With the combination of all of the above, we take [a more] positive view of these [factors] than the World Bank does . . .,” Olivar said.

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.

The World Bank said the gross domestic product (GDP) for the East Asia and the 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.”

GDP, a key economic indicator, is the total cost of final goods and services produced in the country in a year.

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

DOF’s views

Also on Tuesday, Finance Secretary Margarito Teves rejected the World Bank’s forecast about the Philippines.

“We’re focused, and I think we can hit 0.8 percent [GDP growth],” he told reporters.

“The likely scenario is 0.8-percent growth,” he said, adding that this was already a conservative projection.

Reacting to reports that the World Bank had projected a 0.5-percent contraction this year, Teves said: “They are probably cautious.”

Earlier this month, the International Monetary Fund (IMF) had forecast the Philippine economy would shrink by 1 percent this year.

Teves conceded that while a recession was “possible,” all indicators pointed toward modest growth, adding that Manila would continue with its increased spending to stimulate the economy.

He said the World Bank’s forecasts were based on expectations of lower remittances from the millions of Filipinos working abroad and an even deeper decline in exports.

But he said both sectors would do better than the Bank expected.

The Philippines relies heavily on the remittances of about nine million Filipinos working overseas, but there are fears many of them will lose their jobs due to the global financial crisis.

But Teves said that at worst, remittances would remain flat as many Filipinos continued to find jobs abroad, while earlier this month, the central bank said the amount of money sent home in the first four months rose 2.6 percent year-on-year.

Total exports in the first four months of the year plunged 36.4 percent from a year earlier to $10.727 billion.– Angelo S. Samonte And AFP, Manila Times