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Grim economic news

The announcement on Thursday by Intel Corp. to close its production facility in Cavite, a province just south of the capital, and four other plants in Malaysia and the U.S., signaled to many Filipinos the beginning, as one report put it, of a wave of job losses in the Philippines' electronics sector, a key export earner.

Intel Corp. said 1,800 Filipino workers will lose their jobs, adding more bad news to an already grim economic environment. Labor officials said 60,000 workers in the country's information-technology or electronics sector could be lost this year because of the crisis. Electronics accounts for 60 percent of the country's export earnings.

They also said that as many as 34,000 workers have already been laid off or are now working reduced hours. One business newspaper calculated that 15,000 Filipino workers lost their jobs in the past 45 days.

Apart from rising domestic unemployment, coupled by the return of thousands of overseas Filipino workers recently fired from their jobs abroad due to the global recession, the Philippine economy is not expected to perform as well as it did in recent years. According to the National Economic Development Authority, GDP was only 4.5 percent last year, the worst in seven years.

The World Bank said the Philippines will be significantly hit by the crisis and projected GDP growth this year at a measly 3 percent, or 3.5 percent tops. Compare that to the 7.2 percent in 2007, the best in three decades.

Exports, which account for 34 percent of the country's GDP (down from 50 percent in 2000), is expected to drop drastically in the coming year. Indeed, in the first three quarters of 2008, exports grew by only 2.4 percent, compared to the 6.1 percent in the same period in 2007.

Personal consumption expenditure for 2008 is projected at 4.6 percent, according to Ibon Foundation, an independent economic think tank, while government consumption has fared even worse.

“These are the signs of a frail Philippine economy poorly equipped to deal with crisis: a narrowing productive base for generating jobs and incomes, weakening ability to consume and even invest, limited political will to substantially pump-prime, and undue dependence on exports and remittances,” Sonny Africa, Ibon Foundation's research head, said in a statement. “The risk is real that the downturn that started to worsen in the last half of 2008 is the beginning of another long period of stagnation and recession.”  

http://www.globalpost.com/notebook/philippines/090123/grim-economic-news