"We’ll be lucky to post a 2.8-percent growth (in terms of gross domestic product of GDP) for the year," Jose Cuisia Jr., former central bank governor and current chairman of Philam Life said yesterday.
"The Philippines will be one of the most affected countries by the further slowing down of the US economy as a result of the recent attacks. The US is our main export market along with Japan," Cuisia said.
Exports currently account for about 40 percent of GDP.
Cuisia said even regional powerhouse Singapore is in technical recession after posting no growth in the last two quarters.
At the same time, the Philippines continues to be plagued by structural problems preventing the economy from sustaining growth.
He cited as an example, the rise in non-performing loans (NPLs) or bad debts of the banking industry which as of July soared to 17.12 percent from 16 percent last January.
"NPLs have been steadily climbing. It makes you think the economy is getting worse. The banks on the other hand, should realize that they cannot go on restructuring loans," Cuisia said.
He advised banks and financial institutions to set up asset management companies to speed up the disposal of their bad debts and for the banks to accept that they will have to give up these assets or sell them at a loss.
"Even US banks were forced to sell foreclosed assets at 10 US cents per dollar of property when the industry was restructured in the early 1990s."
He added: "The acquired properties of Philippine banks are not moving. The industry should be realistic enough to take a loss and move on a clean slate."
Earlier, Socioeconomic Planning Secretary Dante Canlas said that despite inherent risks and the continued slowdown in the economies of its major trading partners, government is confident economic growth which performed better than expected in the first semester, can be sustained for the rest of the year.