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NEWS UPDATES 15 July 2009

Philippines may escape recession

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The Philippines will likely avoid a recession this year because of remittances, strong consumption, low inflation and interest rates and high liquidity, local daily the Manila Times quoted business analysts as saying Tuesday.

Speaking at a forum at the Philippine Stock Exchange, the analysts said that the economy likely grew in the second quarter and the momentum is expected to be sustained for the whole of 2009.

“The performance of the stock market mirrored the performance of the economy,” said Stock Exchange President Francis Lim, citing the composite index, which has risen 26.2 percent since the start of the year.

Eduardo Francisco, president of BDO Capital and Investment Corp., said that there was about P1.2 trillion ($24.8 billion) of liquidity in the system.

“My clients are seeing growth . . . they are just looking for avenues to invest,” he told reporters.

The optimistic forecasts were in contrast to those of the World Bank and the International Monetary Fund (IMF), which have forecast a contraction of 0.5 to 1.0 percent, respectively for the Philippines this year.

The World Bank and the IMF cited the gross domestic product (GDP) growth of only 0.4 percent in the first quarter of 2009 as evidence of a slowing economy. GDP is the total value of goods and services produced in a country in a year.

Jaime Ysmael, chief finance officer of property giant Ayala Land Inc., said that the country’s property sector was up 31 percent.

He attributed this to continued positive GDP growth despite the global turmoil, large remittances from the millions of Filipinos working overseas, inflation falling to 22-year lows and the reduction in interest rates.

“Consumer spending remains robust,” house building is strong and the Philippine business outsourcing industry is still thriving, Ysmael said.

“We are really in a positive growth scenario. It looks like it will accelerate later on,” he added.

Jose Vistan, head researcher at AB Capital Securities, said that his company had originally forecast a 0.4-percent drop in GDP this year but that might be raised because of signs that the economy performed better in the June quarter. AFP


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