MANILA, Philippines - Investment and brokerage house ATR Kim Eng Securities Inc. said the lower private consumption pattern in the first half of the year despite the steady increase in the amount of money sent from overseas indicate that Filipinos are still wary of an economic recession.
Luz Lorenzo, regional economist of ATR King Eng Securities, said the contribution of private consumption to gross domestic product (GDP) slackened to one percentage point in the first quarter of the year from 3.9 percentage points in the same quarter last year, and to 1.7 percentage points from 3.1 percentage points amid the increase in overseas Filipino workers’ (OFW) remittances.
“The lower private consumption pattern in first quarter and second quarter, despite the strong OFW remittance, may be indicative of Filipino consumers’ concern on current recession,” Lorenzo stressed.
This resulted to a slowdown in the country’s GDP growth to one percent in the first half of the year from four percent in the same period last year. The country’s domestic output, as measured by the GDP, is expected to expand between 0.8 percent and 1.8 percent this year, from 3.8 percent last year, due to the full impact of the global economic meltdown.
The contribution of private consumption to GDP slowed down despite the higher remittances. Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that OFW remittances climbed 3.7 percent to $11.34 billion in the first eight months of the year from $10.94 billion in the same period last year.
BSP Governor Amando Tetangco Jr. earlier announced that the central bank has raised its growth forecast in remittances to four percent instead of zero this year. The amount of money sent home by Filipinos abroad would increase to a record $17.1 billion from $16.4 billion.
Lorenzo explained that OFW remittances would continue to grow despite the US recession and would continue to provide support to the current account that is expected to post a surplus of $7.2 billion this year from $3.9 billion last year.
She also cited the decline in the percentage point contribution of industry to the GDP growth mainly due to the slumping manufacturing sector.
She pointed out that both agriculture and industry sectors posted hefty declines in the contribution to the GDP growth.
The economist said she expects the Philippines to post a GDP growth of two percent this year from 3.8 percent last year as inflation eases to 3.1 percent from 9.2 percent.