Philippines

Current Economic Outlook

Thanks to its consumer‐driven economy, the Philippines eluded a recession despite a steep plunge in exports. The Philippines' financial underdevelopment left its financial sector relatively isolated from the global credit crisis and healthy balance sheets allowed banks avoid the credit tightening seen in the countries closer to the epicenter of the global financial crisis. However, the global financial crisis did not leave this recession‐less bright spot in Asia unscathed. GDP growth slowed sharply as falling external demand created excess capacity in the export sector, prompting personnel and pay reductions. Fortunately, robust demand overseas for Filipino labor kept remittances surprisingly resilient. Remittances buoyed private investment and household spending. The Philippines' Q2 2009 GDP growth accelerated to 1.5% y/y and 2.4% q/q after bottoming in Q1 2009—just short of a technical recession. Net exports and private sector investment extended their abysmal performance but were offset by public investment and private domestic consumption. As the global economy picks up speed, the Philippines should continue to avoid a recession in 2009. In 2010, the Philippines will post slower…

Read the latest RGE Global Economic Update.