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PIA Press Release

Remittance, ERP to help boost RP economy this year - BSP

Manila (17 June) -- Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. believes the domestic economy can withstand the global slowdown and continue to post growth this year.

This even after the government further revised downward its 2009 growth target while the International Monetary Fund (IMF) now see a one percent contraction for the Philippines economy this year.

"The government is still forecasting positive growth this year, albeit slower than previous forecast," he said.

Last week, the inter-agency Development Budget Coordination Committee (DBCC) again slashed the government's 2009 growth target to 0.8-1.8 percent from the 3.1-4.1 percent previously in line with the global developments.

Economic managers said they remain positive on the domestic economy's output, as measured by gross domestic product (GDP) this year but they expect the impact of the global economic meltdown to be larger particularly on consumption and investments.

The economy grew by a mere 0.4 percent in the first quarter this year against year-ago's 3.9 percent after domestic consumption declined on back of lower spending particulary by beneficiaries of Overseas Filipino Workers (OFWs) despite the continued strong remittance inflows.

Economic managers, however, noted larger portion of the remittances went to savings.

A BSP survey in the second quarter this year showed that consumers remain bullish on their buying intentions in the rest of the year, thus, monetary officials said this will boost spending and bouy up the economy.

"As reported, consumption and investments, which slowed significantly in Q1, are expected to recover in the next quarters, supported by steady remittances, the full impact of the ERP (economic resiliency plan), and improvement in market confidence as more news/data are released that the worst in global contraction may be over," Tetangco added.

The central bank project a flat growth for remittances this year as some OFWs lose jobs because of the global slowdown but monetary officials believe that remittances will post a positive growth this year on back of continued higher demand for OFWs.

Tetangco said they have not revised their remittance forecast for this year but "this will be reviewed shortly."

In end-April this year, remittances posted a 2.6 percent growth after inflows for the four-month period aggregated to US$ 5.5 billion from year-ago's US$ 5.36 billion. (PIA) [top]

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