Trade Chief: Recession is not going to affect pH significantly

Commerce Secretary Alfredo Pascual said the Philippines will not be affected like other countries if the world falls into recession this year.

In an interview with radio station DZRH on Saturday, Pascual said a recession — where growth has been falling for at least two quarters — doesn’t mean the domestic economy will also contract.

Last year’s GDP growth is expected to be just below the government’s target of 6.5 to 7.5 percent. For 2023, economic directors are targeting slower growth of 6.0 to 7.0 percent.

Growth at the end of the third quarter was 7.7 percent, already above the official target for 2022. The government will release results for the full year before the end of this month.

“The situation here in the Philippines is different in that the business landscape has generally been good,” Pascual said, due to strong consumer spending.

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He added that this also means that the country is not as dependent on exports as others.

Pascual added that the rise in remittances from OFWs “gave a boost to the purchasing power of Filipinos.”

As of the end of October last year, personal transfers rose 3.1 percent to $29.72 billion from $28.82 billion a year earlier based on the latest central bank data.

“In addition, the Information Technology and Business Process Management (IT-BPM) sector is adding a boost to the sector as it continues to get more investment and employment,” said Pasquale.

“These two factors alone make up about 20 percent of our GDP and that’s pretty huge.”

Pasquale said tourism, which has rebounded this year as the government eased movement and health restrictions, is poised for a summer surge.

“Local tourism is on the rise as many Filipinos have already started touring,” he said.

“In fact, this so-called ‘revenge travel’ has convinced local resorts that closed during the pandemic to reopen again.”

Other businesses that benefit from the tourism boom are restaurants, shops, and transportation.

Major industries such as exports, manufacturing and business process outsourcing are “expected to continue to grow this year due to the Philippines’ massive digital orientation,” Pascual said.

“Moreover, with the massive interest from investors in these sectors, we also see an increase in employment in the country this year as well.”

Last week, the World Bank warned that the world was approaching recession as it lowered forecasts for this year and the year after.

While global GDP growth was estimated to have reached 2.9 percent last year, the forecasts for 2023 and 2024 have been revised to 1.7 percent and 2.7 percent respectively, from a previous 3.0 percent for both years.

Meanwhile, the Philippines is expected to miss its official targets for 2023 and 2024.

The Washington-based multinational raised its estimate for growth in 2022 to 7.2 percent from 5.7 percent, lowered its forecast for 2023 to 5.4 percent from 5.6 percent and raised that in 2024 to 5.9 percent from 5.6 percent.

The 2023 and 2024 revisions fall short of the government’s targets for those years.

GDP growth in 2021 was 5.7 percent, a recovery from a contraction of 9.5 percent in 2020.

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