REMITTANCES, investments, production all falling down.
The Philippine economy is facing its worst decline in more than 20 years, with production, investments and even overseas remittances falling in the first quarter of 2009.
In its midyear economic and political report, Ibon, a private think-tank group, said the economy, as measured by its gross domestic product (GDP), shrank by 2.3 percent in the first quarter of 2009.
It is “the lowest and only negative growth in the last 20 years,” the research group said.
Citing figures from the National Statistical Coordination Board, Ibon said the GDP went down from 3.9 percent in the first four months of 2008 to 0.4 percent in the same period this year.
Foreign and domestic investments fell by 47.9 percent in 2008, according to figures of the Bangko Sentral ng Pilipinas cited by Ibon. In particular, investment in manufacturing went down by 44 percent that year.
Jose Enrique Africa, head of Ibon’s Research Department, said the local job crisis is “the worst in history,” with 10.7 million Filipinos either jobless (4.1 million) or underemployed (6.6 million). The number of full-time workers fell by about 925,000.
Even as about eight to nine million Filipinos are already working abroad, actual remittances have slowed down in the first quarter of the year, from 4.9 percent in February and 3.1 percent in March to just 2.2 percent in April, according to BSP figures. For that period, total remittances fell to just 2.6 percent—a steep decline from 14.5 percent in the same period in 2008 and 26.1 percent in 2007.
The other day, however, the BSP was reported as saying that remittances were expected to rise between 2 and 3 percent in May because of increased deployment of Filipino workers abroad.
Ibon, however, said that overseas remittances in the first four months of 2009 had already fallen in 10 out of 20 countries which account for 96 percent of overseas remittances to the Philippines.
Citing BSP figures, the research group said the largest fall in actual transfers came from the U.S. which shrank by 10.4 percent in January-April 2009 compared to the same period last year. Remittances from the U.S. in the first four months of 2009 amounted to $2.29 billion, or $266.4 million less than $2.55 billion in the same period in 2008. Remittances from the U.S. accounted for 48 percent of total flows to the Philippines last year.
Similarly, remittances from other countries where Filipinos are deployed have been going down. Kuwait registered a fall of 52.7 percent; Taiwan, 32.5 percent; Italy, 24.5 percent; Hong Kong, 22.4 percent; South Korea, 12.6 percent; Bahrain, 10.4 percent; the United Kingdom, 9.4 percent; Spain, 10.1 percent; and the United Arab Emirates, 1.9 percent. Remittances from these countries were $458.6 million less than the first quarter of the same period last year.
Africa said the fall in remittances is happening even as the Arroyo government has changed the government’s policy toward overseas deployment last year.
From a policy of considering overseas employment as a stop-gap measure for the economy, Arroyo issued Administrative Order no. 247 last year calling for “full-blast market development efforts” and to “aggressively deploy” Filipino migrant labor.
This means, Africa said, that government has come to regard overseas deployment as a cornerstone of Philippine economic policy.
With remittances as an important factor in consumption, Ibon noted a decline in personal consumption expenditures from 5.1 percent in the first quarter of 2008 to just 0.8 percent this year, calling it “the worst first quarter performance in 23 years.”
Local employment, Africa said, has been severely compromised because of longstanding government neglect in agriculture and manufacturing, two sectors that would have generated jobs.
Agriculture, which grew by 3.2 percent in 2008, grew by just 2.1 percent in the first quarter of this year. Manufacturing shrank by 7.3 percent in the first quarter of 2009.
Citing the National Statistics Office’s latest Monthly Integrated Survey of Selected Industries, Ibon said 24 percent of firms have been operating at below 70-percent capacity; 65 percent at 70 to 89-percent capacity; and only 11 percent at full capacity.
Ibon blamed the economic downturn on the Philippine government’s continued adherence to globalization or free-market policies. It further said that this was ironic considering that the most economically advanced countries such as the US, Japan and those in Europe have been implementing protectionist policies for their own economies.
It cited as example the U.S. which has been giving multi-billion-dollar bailouts to its collapsed financial firms and automakers and inserting a “Buy American” provision in its stimulus package.
The UK, Germany, France and Sweden are also providing huge bailouts to their automakers, with the stimulus packages of Spain and France encouraging spending on domestic goods. At the same time, discriminatory and anti-dumping measures against China have also been taken by the US and European countries.
These countries, Africa said, have been two-faced in promoting globalization.
Several developing countries, however, have increased tariffs or restricted their quotas on imports to protect their own economies. These countries include India, Indonesia, Vietnam, the Ukraine, Russia, Argentina, Ecuador, Turkey and Mexico.