IBON: 0.4% GDP also shows OFW remittances' growing failure to sustain economy

MANILA, Philippines — The anemic 0.4-percent growth in gross domestic product (GDP) for the first quarter of 2009 not only warns of a recession but also shows that remittances from overseas Filipino workers are no longer enough to prop up the economy, a militant think tank said.

IBON Foundation also noted the growth in private consumption at 0.8 percent is the slowest growth in 23 years since 1986, when it grew by only 0.7 percent.

"Growth in private consumption which accounts for 73% of GDP has drastically slowed to just 0.8% from the same period last year — this is the slowest growth in 23 years since 1986 when it grew just 0.7 percent. A major factor driving consumption growth down is the likewise drastic slowdown in remittances in the first quarter of 2009," it said on its website (info.ibon.org).

It added the global downturn has caused growth in remittances to slow to just 2.7% in the first quarter of 2009 from 13.2% growth in the same period last year and 24.0% in 2007.

The $1.47-billion remittances in March 2009 brings total first quarter 2009 remittances to $4.06 billion which is just a 2.7% increase over US$3.95 billion in the first quarter of 2008, it said.

Also, it said this 2.7% increase in the first quarter continues the trend of slowing growth in remittances in the last 5 years since 2005.

"This also suggests that domestic consumption and growth will be further adversely affected in the coming period by the global downturn," it said.

On the other hand, IBON said these are indications that the country’s cheap labor export policy may be reaching its limits in the face of global migration trends in the last years and the global turmoil since last year.

Many other countries have also been jumping on the migration bandwagon especially with the hype over the last decade of migration as a pathway to development, it said.

"This has presumably been increasing the supply of migrants seeking overseas work worldwide. The financial and economic crisis since 2008 is also slowing down growth and job generation, or leading to outright job losses, across the globe," IBON said.

Also, IBON said there are other factors driving consumption growth down including the recent collapse in the country's export sectors and falling foreign and domestic investment.

It said these have led to thousands of retrenchments on top of cuts in workers' earnings and benefits.

"The slow economic growth only underscores the urgency to put an end to government’s policies that overly rely on unsustainable sources of growth such as overseas workers' remittances and foreign investments.

It also highlights the need to reverse the policies of economic liberalization, which have further weakened the capacity of the economy to withstand the impact of the global crisis," it said. - GMANews.TV

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