Despite the weak growth in the remittance sector, the country’s strong domestic market pushed the Philippine economy to maintain a steady progress in the first three months of this year, the International Monetary Fund (IMF) said.
IMF Resident Representative Shanaka Jayanath Peiris said the decline in remittances would not pull down the gross doemstic product growth rate for the first quarter because of strong consumer spending.
“There is no reason to worry about it. We are all expecting the gradual slowdown and there is nothing wrong with it. It means that the domestic economy [is] attracting more, people are staying more,” Peiris said.
The Bangko Sentral ng Pilipinas (BSP) earlier reported a slow 3-percent rise in the country’s remittance rate for March this year. This is the lowest growth rate since August 2009. Remittances comprise about 10 percent of the Philippines’s gross domestic product (GDP).
The IMF said robust consumption growth would mainly drive the organization’s forecast on the country’s GDP growth, which is at around 6 percent.
Aside from the boom in consumer spending, the IMF representative also cited public investments to add to the expected economic growth in the country.
“Especially now that the government budget has rolled out a lot of measures so that the projects [can] go ahead earlier. If the projects roll out quite early and the implementation is well, then we expect that to boost the growth as well,” Peiris said.
The IMF representative said the GDP growth rate could still be higher if the global economic backdrop will continue to weaken and the domestic market will continue to rise.
“We do highlight the possibility that given the global financial conditions, domestic-market conditions and low market rates, there is a possibility that growth could be higher. But it will not be too far from 6 percent,” he said.
The BSP is expected to announce the official GDP growth rate for the first quarter of this year by the end of May.
Source: Bianca Cuaresma, BusinessMirror, 22 May 2013
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