Economic managers look to remittances, PPP drive

PHILIPPINE economic managers expect remittances and the public-private partnership (PPP) initiative to help prop up the economy this year. Socioeconomic Planning Secretary Cayetano Paderanga said rising prices of food, fuel and transportation services are unlikely to dampen consumer spending.

”We hope the price increases will not be that sharp … and we still see the main source of consumption continuing. This will be the remittances,” Paderanga, who is also director-general of the National Economic and Development Authority (NEDA), told reporters over the weekend.

Personal consumption expenditures (PCE) account for about 70 percent to 80 percent of gross domestic product (GDP), the country’s broadest measure of economic performance.

Philippine GDP grew 6.5 percent in the third quarter, as PCE expanded 8 percent. In the second quarter, PCE grew 9 percent.

The government expects GDP to grow between 7 and 8 percent this year.

Paderanga said overseas Filipino workers’ (OFW) remittances will lead to continuing demand, propping up the sectors that have been growing in the past few years.

Bangko Sentral ng Pilipinas (BSP) data showed that OFW money grew by eight percent in the first 10 months of 2010.

”We just hope we can add to that through other sectors, such as tourism,” Paderanga said.

Separately, BSP Deputy Gov. Diwa Guinigundo said the government is also pinning its hopes on its PPP infrastructure build-up, which is expected to raise the investment-to-GDP ratio to 18 percent from the present 14 percent.

The NEDA estimated that the government’s PPP initiative would rake in up to P739.78 billion in investments.

Pundits have been saying that the economy would likely slow this year since 2010 enjoyed from non-recurring events such as the national elections.

But even without the PPP, the country benefited from foreign investment in a “big way,” said Guinigundo.

Data from the BSP showed the country registered net FDI inflows of $1.1 billion in the first 10 months of 2010, or 36.5 percent lower than the $1.7 billion in the same period in 2009.

“You have to remember that investment is a ‘stock concept.’ There is a cumulative effect. This would all translate to higher potential capacity, so that in the future, even if the immediate preceding year was moderate, the impact of that could still be felt in the next few years,” Guinigundo said.

He said new industries—such as mining, construction – are coming, while business process outsourcing remains strong. –DARWIN G. AMOJELAR SENIOR REPORTER AND LAILANY P. GOMEZ REPORTER, Manila Times