January 30 2009
Philippines' Expats Help Economy Beat Expectations
by:JAMES HOOKWAY

The Philippines' economy grew faster last year than many analysts expected, in a stark exception to global trends, as strong remittance flows from about eight million Filipino expatriates helped prop up consumer spending and the broader economy.

The country's gross domestic product grew by 4.6% in 2008, the Philippines' National Statistical Coordination Board announced Thursday. That's less than its 7.2% growth in 2007, but more than the 4% many economists predicted. In the fourth quarter, GDP grew 1% from the third quarter, avoiding the contractions afflicting some other Asian economies.

Analysts still are concerned about how the country will withstand a worsening export slump. On Wednesday, Philippine Labor Secretary Marianito Roque warned that in a "worst-case scenario," as many as 300,000 people in this country of 90 million could lose their jobs in the coming months.

The steady flow of remittances sent home by Filipinos working overseas has provided an economic safety net that many of the Philippines' Asian neighbors lack. The Philippines' central bank expects the remittances to have reached $15 billion or more in 2008, and the total could grow another 10% this year.

But the question now is whether remittance-driven spending, combined with government stimulus, can continue to offset the slump in exports and a series of layoffs among the country's manufacturers. For some analysts, the economic data are a lagging indicator and don't offer much comfort for the current year.

Intel Corp. on Jan. 21 announced it was shutting a semiconductor testing and assembly plant south of Manila. Texas Instruments Inc., another big employer in the Philippines, said it is laying off workers as part of a global retrenchment. Total exports fell 12% year-to-year in November.