GDP

RP economy to grow by 3% in 2009: World Bank
gence France-Presse | 01/20/2009

The Philippine economy will likely grow by only three percent this year as the country feels the full effects of the global financial crisis, the World Bank said Monday.

"The economy suffered a steep decline in its growth rate in 2008 and further decline is already visible from the latest economic indicators," the World Bank said in its quarterly economic update.

It estimated expansion in 2008 of 4.3 with growth hitting only three percent in 2009 following a three-decade high figure of 7.2 percent in 2007.

"Economic growth has held up relatively well up to now but there are signs that the severe global slowdown will further and significantly impact the economy," the World Bank warned.

It said the services and agricultural sectors had both underperformed and that the banking system remained "exposed to risk of domestic and external shocks... through its large holding of sovereign paper."

Production costs had remained high, squeezing corporate profits and even the remittances of the eight million Filipinos working overseas, which have long supported the economy, had slowed down since October, the World Bank said.

It forecast that such remittances would grow by only four percent this year compared to 13 percent in 2008.

Exports would decline by one percent in 2009, especially since 60 percent of them were in the electronics components sector, which was extremely vulnerable to the downturn in developed countries, the World Bank said.

Philippine economic officials have previously said that the economy grew by at least 4.6 percent in 2008 and is forecast to grow by 3.7 and 4.7 percent this year.

The government hopes to sustain growth this year through increased spending on infrastructure and social services