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IMF sees no growth in ’09, feeble rebound next year

By Ruben Hortelano

04/24/2009

From bad to worse to worst, the International Monetary Fund (IMF) which recently downscaled its growth forecast on the country to a low 2.25 percent now said the Philippine economy is expected to end the year flat and will make a feeble recovery next year with a one percent growth, the latest World Economic Outlook report released yesterday showed.

In a late briefing the other night, IMF resident representative Dennis Botman said the revised estimate does not indicate the lender has seen an adverse turn in the economic fundamentals this year.

Most other economies around the world have been contracting or undergoing a recession as a result of the ongoing global economic downturn.

“The Philippines remains one of the few countries in Asia that will avoid negative growth in 2009, with most economies suffering deep recessions,” Botman said.

“The growth outlook has become more challenging. Growth is now projected to be flat in 2009, followed by a modest one percent growth in 2010,” Botman said.

The multilateral institution said its forecast for no growth this year “needs to be seen in the context of the global economic developments and outlook and reflects the prospect of a significant contraction in exports and imports.”

Botman said the forecast was also the result of an anticipated decline in this year’s remittances from overseas Filipinos.

He noted that such remittances are to decline by 7.5 percent this year instead.

This means, based on Botman’s forecast, remittances this year should not top $15.17 billion.

He said private consumption should remain “relatively robust as a result of lower inflation and commodity prices, offsetting the negative contribution to growth from investments and net exports.”

This scenario is consistent with BSP forecast that exports this year is to contract by five percent up to seven percent and for imports to contract from 10 percent up to 12 percent.

Botman also said while overseas Filipino remittances were seen to slow down, it should continue to post positive expansion in the early months of the year.

“The projected recession in many of the host countries, lower commodity prices and recent trends in remittances and deployment figures underpin our projection for a decline in total remittances this year before recovering in 2010,” he said.