MANILA, Dec 29 (Xinhua): In recent months, the ripple effects of the global financial crisis have reached the Philippine shores and started taking its toll on the country's economy.
In its latest report, the Philippine National Statistics Office said that the country's export receipts in October 2008 totalled only 3.971 billion US dollars, down by 14.8 per cent from last year's 4.660 billion dollars.
For the first ten months, total exports posted a growth of 1.9 per cent to 42.838 billion dollars from 42.019 billion dollars in the same period of last year, due to weak demand from the United States, Japan and other traditional markets of Philippine products.
Earlier, local goods sold abroad were projected to increase by five per cent to seven per cent. It has been revised to two to four per cent.
The Philippines, an island country, is far from being decoupled from the outside economically.
Meanwhile, the statistics agency reported that consumer prices in the country from January to November rose to 9.4 per cent from 2.7 per cent in the same period of last year.
For the whole year, the inflation is targeted between nine per cent to 11 per cent.
High prices have eaten into the profit margins of companies, thus curtailing any aggressive expansion plans.
Lower exports and high inflation reduced the country's economic performance for the first nine months of the year to 4.6 per cent, much lower than last year's growth rate of 7.3 per cent.
Alongside with the economic slowdown, there came the swelling number of jobless Filipinos.
The country's unemployment rate rose 6.8 per cent or 2.525 million in October 2008 from 6.1 per cent or 2.246 million during the same month of last year.
The worrisome number of jobless Filipinos reflected the deterioration of the domestic labour market owing to the weaker Philippine economy and that higher misery is expected for Filipino workers, analysts said.
The financial markets also felt the pinch of the global crisis although the banking sector is less impacted compared with economies like Singapore and China's Hong Kong.
To stimulate the economic growth, the Philippine central bank BSP decided earlier this month to cut interest rates by 0.5 percentage point in spite of the high rate of inflation.
The movement brought the borrowing rate to 5.5 per cent and the lending rate at 7.5 per cent.
The government had abandoned its goal to achieve a balanced budget by 2010 and announced an "economic sustainability plan," costing some 300 billion pesos (6.3 billion dollars) to keep the country afloat amid the global downturn.
The Philippines expects to incur a deficit of 75 billion pesos (1.58 billion dollars) or one per cent of gross domestic product (GDP) in 2008 and 102 billion pesos (2.15 billion dollars) or 1.2 per cent of GDP in the coming year.
However, the Manila-based Asian Development Bank (ADB) said that with its "public debt at about 60 per cent of GDP, the Philippines may have little scope for further fiscal expansion."
Besides, the country's external debt stood at as high as 53.5 billion dollars as of the end of September.
Foreign direct investments continued to flow into the economy as of September, but lower than the year-ago level due to uncertainties amid the spreading financial crisis.
As one of the few bright lights amid the doom and gloom of the global crisis, the business process outsourcing (BPO) industry is expected to grow by 40 per cent this year in the Philippines, with revenues of around seven billion dollars.
Industry experts say that the US recession would result in more BPO investments in the Philippines since more companies would cut costs by outsourcing some of their functions to the underdeveloped, English-speaking country. But no one believes that the industry, still in its infancy, alone will save the country's economy.
What the Philippines depends more on is the remittances of the overseas Filipinos.
More than eight million Filipinos are living and working abroad, who remitted more than 13.7 billion dollars to the local economy from January to October this year and are expected to send a total of 16.9 billion dollars by the end of the year, 13 per cent higher than in 2007.
Consumer spending, the main driver of domestic expansion and driven by the overseas remittances, had slowed considerably as investment spending did, and is expected to slow down further without sufficient lifeblood.
According to the government, the Philippine economy is likely to expand 3.7 per cent to 4.7 per cent next year.
The ADB painted a grimmer picture, citing weak exports and lower private consumption as the slowdown's main culprits.
Global meltdown taking toll on Philippine economy
FE Team | Published: December 30, 2008 00:00:00 | Updated: February 01, 2018 00:00:00
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