Nov 05, 2009 (The Manila Times - McClatchy-Tribune Information Services via COMTEX News Network) --

STRONG remittances from overseas Filipino workers (OFWs) spared the Philippines from a recession this year, and would allow the country to undertake a slow recovery next year, the World Bank said. In its Philippines Quarterly Update, the Washington-based lender projected that the Philippine economy, as measured by the country's gross domestic product (GDP), would grow 1.4 percent this year, better than an earlier forecast of a 0.5 percent contraction.

This was despite the estimated reduction by 0.1 to 0.4 percentage points that typhoons Ondoy and Pepeng would cause on Philippine GDP.

The Development and Budget Coordinating Committee projected growth of 0.8 percent to 1.8 percent this year from an earlier estimate of 3.1 percent to 4.1 percent.

For 2010, the World Bank projected 3.1-percent economic expansion from an earlier forecast of 2.8 percent.

The lender attributed the upward revisions to the better-than-expected remittance inflows--with remittances now projected to increase by 4 percent this year and 5 percent next year. Also responsible for the revision of its growth forecast is the stronger-than-anticipated recovery in the second quarter of the year and a stronger fiscal impulse for this year and 2010.

In the second quarter of the year, the Philippine economy expanded by 1.5 percent.

"The Philippines avoided a recession. Thanks to counter-cyclical remittances," Eric Le Borgne, World Bank senior economist in the Philippines said. He said the export and the corporate sectors are showing signs of recovery.

"While SMEs [small and medium enterprises], especially those which are export-oriented, are still reeling from the crisis, the corporate sector focusing on the domestic market is showing improved profitability.

With financial markets also on the rebound, banks are able to turn around losses experienced in the last quarter of 2008," Le Borgne said.

He said the property sector remained strong owing to the continuing demand for condominiums and houses from expatriate Filipinos as well as offices from the bourgeoning business process outsourcing (BPO) industry.

Bert Hofman, World Bank country director, said, "We believe the government's forecast for 2009 to be entirely feasible."

"Remittances are staying strong. Government consumption and public construction will continue to benefit from the national government's spending in the remaining months of 2009," he said.

The country's "quick recovery" reflects the primarily domestic nature of the economy, the limited exposure to foreign demand, the conservative nature of banks and prompt and forceful fiscal and monetary stimuli, the World Bank said.

The bank also said that despite an expected but localized increase in inflation due to typhoons Ondoy and Pepeng, inflation is projected to average 2.9 percent this year from 9.3 percent in 2008.

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