Economy grows by slower 4.6% in 2008

The economy grew at its slowest pace in seven years in 2008 as the global financial crisis took a toll on services and industry while agriculture wilted from typhoon damage.      

Growth in gross domestic product slowed to 4.6 percent last year from a three decade high of 7.2 percent in 2007, the government said yesterday.

President Arroyo struck an optimistic note, saying that with two-thirds of the world in recession, “We should all be proud that our country is growing.” The government forecasts the economy to grow between 3.7 percent and 4.7 percent this year.      

Growth in the services sector – the linchpin of the economy – dropped to 4.9 percent from 8.1 percent the previous year. Agriculture, which employs four in every 10 Filipinos, grew 3.2 percent compared with 4.9 percent in 2007 reflecting a drop in rice and corn production due to typhoon damage and high fertilizer costs.    

“Our neighboring countries also experienced a dramatic slowdown due to high inflation, high oil prices, and the deepening global financial crisis in the fourth quarter,” said Socioeconomic Planning Secretary Ralph Recto. He said the “continuing debacle” in the global economy took a toll on the country’s trade as merchandise exports contracted, with declining shipments of electrical machinery, semiconductors, electronic microcircuits and garments.     

Several multinationals, including Intel Corp. and Texas Instruments Inc., have announced job cuts in the Philippines due to falling demand, but International Labor Organization economist Steven Kapsos said Thursday that this had not resulted in a marked increase in unemployment so far.

He said the crisis was likely to affect workers “in other ways that are somewhat more difficult to measure, such as declining hours of work, an increase in part-time work, pressure for lower wages and less job security.”     

Unemployment last year averaged 6.8 percent – or one out of 10 Filipinos in the work force of 58.2 million. Despite the global slowdown, 3,000 Filipinos were still leaving their homes every day for jobs abroad.

About 10 percent of the population works overseas, last year sending home an estimated $17 billion, or one-tenth of GDP, and helping to fuel domestic consumption.     

Recto said fourth-quarter GDP expanded 4.5 percent, and third-quarter growth was revised from 4.6 percent to five percent, bringing the overall 2008 expansion in line with government’s projection. – Iris C. Gonzales with AP, Philippine Star