PHILIPPINES, May 28 – The Philippines is "teetering" towards recession with economic growth slowing to a 10-year low of just 0.4 percent due to the global financial crisis, officials said Thursday.
The 0.4 percent gross domestic product (GDP) growth for the three months to March, from 2.9 percent in the last three months of 2008, was the lowest since the last three months of 1998, when the Philippine economic output plunged 2.4 percent amid the Asian financial crisis, according to official figures.
"Historic declines in manufacturing and trade sent the economy into hiccups," said Romulo Virola, senior official of the economic planning ministry.
Industrial output for the first quarter fell 2.1 percent with manufacturing plunging 7.3 percent. Trade, led by electronics, was down 0.2 percent.
"The Philippine economy is now teetering into recession," Virola told a news conference, saying the seasonally adjusted gross domestic product in the January-March quarter fell 2.3 percent.
However, Virola\’s boss, Economic Planning Secretary Ralph Recto, later appeared to contradict him, insisting: "I do not expect a recession."
While Recto expected the economy to "remain afloat in 2009," he told reporters he was "less confident" now that Manila would achieve the lower end of its already revised GDP growth target of 3.1-4.0 percent.
"There might be a need to readjust our growth projections for the year," he said without giving exact figures.
The growth projections have a crucial bearing for Manila\’s burgeoning budget deficit, with the full-year ceiling set at 250 billion pesos (5.26 billion dollars) as the government pins its hope on increased spending on infrastructure and social services to kickstart the stalling economy.
With farm sector growth also slowing to 2.1 percent compared to 2.9 percent in the three months to December 2008, construction became the main growth driver for the first three months as developers rushed to meet pent-up demand for housing with the prices of building materials easing, Recto said.
Meanwhile, the government agency said it was revising downwards the economic growth data for the past three years.
The economy actually grew 5.3 percent in calendar year 2006, not 5.4 percent as previously estimated, Virola said.
GDP growth in 2007 was trimmed to 7.1 percent from 7.2 percent, while the 2008 growth was cut sharply to 3.8 percent from 4.6 percent. Economic growth in the last three months of last year was actually 2.9 percent instead of 4.5 percent, Virola said.
Recto said "the most pressing challenge for me is the (prospect) of a reduction" in remittance flows by the country\’s nine million-strong overseas workforce.
The cash transfers are equivalent to 10 percent of GDP and are the main driver for the consumption-led economy.