by Cail Ordinario/BMirror/12.09.08
IT’S just good luck—in an economic depression, the usual remedy is to spend, spend, spend; and with the depression from its main trading partner the United States spreading around the world, including the Philippines, the elections just around the corner is what the country needs. This early, those eyeing Mrs. Arroyo’s seat are already spending, spending, spending.
Add to this the expected increased transfer to outsourcing sites—the Philippines being a most preferred one—of more business back-room operations from scrimping businesses in the US, the continued remittances of Filipinos working abroad and tourists seeking cheaper but great destinations, of which the Philippines is at the top or near it, and economists begin to be more sanguine about the near future.
One of them, Dr. Bernardo Villegas of the University of Asia and the Pacific (UA&P), said that while he expects consumer spending in 2009 to slow down, he also expects the growth range will be within 3.8 percent to 4.5 percent, with the higher end being “the more accurate.”
He said the 4.5-percent gross domestic product (GDP) growth projection in 2009 is also the growth rate he expects for 2008, during which the economy grew by 4.6 percent in the first three quarters, but he sees it posting only about 4.3 percent to 4.4 percent in the last.
He predicts the country will feel the effects of the global slowdown until the second quarter of 2010, when he expects the United States economy to start its recovery. But due to several factors, 2009 will not be as difficult for Filipinos.
“The slowdown in the Philippine economy will be primarily due to stagnant exports—we are too dependent on electronics exports to the US consumer market that is contracting massively—and to sluggish foreign direct investments from the US. Fortunately, we have a reasonably large domestic market, thanks to our 90 million population made up of predominantly young people. This internal market, bolstered by some $16 billion inward remittances from overseas Filipino workers [OFWs], can keep personal-consumption expenditures growing still at 3 percent to 4 percent,” Villegas said in a statement.
Villegas noted election spending in the Philippines usually starts to flow a year before the elections, and this would also give a boost to spending. He foresees that “serious candidates” for President would pump in around P15 billion to P20 billion to the domestic economy next year.
“Presidentiables” could spend around P3 billion to P5 billion each in 2009, he added.
In addition, Villegas said the recession in the US and the recent bombings in Mumbai, India, will make the Philippines a more attractive business-process outsourcing (BPO) destination. This will not only secure jobs in the BPO sector but also continue the real-estate boom the country is experiencing.
He said the BPO sector will become even more competitive as the peso continues to depreciate against the dollar. Villegas expects the exchange rate to settle at P47 to a dollar in 2008 and reach up to P50 to a dollar next year.
“The BPO sector may actually benefit from the slowdown of the US economy. We should expect to see more US enterprises, medium-scale and large, who will increasingly make the Philippines the hub for their back-office operations, attracted by the much lower labor costs and less expensive rental of office space.”
Similar to BPOs, the tourism industry may also grow since most of those who will be looking for affordable vacation destinations may start considering the Philippines as the best alternative to high-end
destinations.
Villegas said that while other economists are fearful of the job security of most OFWs due to the recession, most OFWs will not be affected since they work in personal and medical services and are difficult to replace.
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