Philippines expects "rebound mode" of global economy

Special Report:Global Financial Crisis

By Liu Hua, Mia. M. Gonzalez

MANILA, April 28 (Xinhua) -- The Philippine government is gearing up for a "rebound mode" following upbeat indicators in the global economy, officials said on Tuesday.

At a Cabinet meeting, President Gloria Macapagal-Arroyo ordered the country's economic managers to prepare for a possible rebound this year after the National Economic and Development Authority (NEDA) reported positive developments in the world economy, but said preparations for the worst should still continue, according to Cabinet Secretary Silvestre Bello III. NEDA is the social and economic development planning and policy coordinating body of the Philippines.

At a news briefing after the Cabinet meeting, Bello said that based on the NEDA presentation, the global economy is now getting better and "we are now expecting a rebounding mode."

"They (the economic managers) said that in two to three years there will be a rebound but apparently in less than one year there is already a rebound mode so the President wants to make sure that the government is very prepared to react to this rebound mode," Bello said.

NEDA Deputy Director-General Rolando Tungpalan said that based on various sources from the United States, Europe and Asia, "there seems to be growing consensus of the bottoming out of the recession."

"Last month, we were all uncertain about the situation -- how long the recession globally would happen and how deep -- but the numbers have been showing that indeed there is a reduction in the fall. It is still falling but at a lower pace," Tungpalan said.

He said that because of positive developments at home and abroad, the Philippines remains "very hopeful" that it can meet its current macroeconomic targets, but added that the latter can still be revised upward or downward if necessary.

"We remain very hopeful. We still maintain our 3.1-4.1 (percent) growth target but being sensitive to global events...As the President had said this morning, let us be prepared for the worst, but also be prepared for the best," Tungpalan said.

On whether the government can meet its deficit target for the year, NEDA Director for Planning Dennis Arroyo said, "we shall revise upward or downward depending on the first quarter results. For now, we believe that we can meet the target of 199 billion pesos (4.10 billion U.S. dollars). That is 2.25 percent of GDP which is still within reasonable range."

The planning director said that the Philippines continues to have a thriving business process outsourcing (BPO) industry where hundreds of thousands of jobs have yet to be filled up.

The Philippine BPO industry's export revenues are forecast to grow by 20 percent to 30 percent in 2009, hitting over 7 billion U.S. dollars, as many foreign companies continue to outsource some of their functions to countries with cheaper but skilled labor force amid the global crisis. The Philippine BPO industry includesfirms such as call centers, animation companies, software developers and medical transcription firms and is considered among the country's sunrise industries. The BPO sector earned 6 billion dollars in export revenues in 2008, or 26 percent more than 2007. Call centers contributed 70 percent to total revenues.

According to Deputy Director-General Tungpalan, dollar remittances of Filipino workers abroad grew by 4.9 percent in February, very far from the -11 percent contraction assumed by "some quarters," apparently the International Monetary Fund (IMF), in predicting flat growth for the country this year. Filipino officials have dismissed IMF's forecast as too pessimistic.

The Philippines is one of the world's biggest labor-exporting countries, and remittances from migrant workers account for 10 percent of the Philippine economy. Remittances surged 14 percent on year to 16.4 billion dollars in 2008. Government officials forecasted that overseas remittances growth for this year will be flat.