The Philippines is seeking to thwart the effects of the financial crisis with easier monetary policy and higher state spending, authorities said, to keep a lid on unemployment which is one of the highest in Asia. As the global downturn threatens jobs of tens of thousands of Filipinos working overseas, the central bank forecasts remittance growth to be flat this year, likely weighing on domestic consumption. Slower remittances, which reached nearly 11 percent of gross domestic product last year, are also seen squeezing the economy as these inflows also support the peso and the balance of payments. “We will consider opportunities to further ease monetary policy to help stimulate growth,” central bank Governor Amando Tetangco said at an investor forum attended by Philippine President Gloria Macapagal Arroyo and her economic managers. “Monetary policy is flexible and has room to act pre-emptively and swiftly,” Tetangco said. More than a tenth of the country's population of 90 million work overseas, mainly as seafarers, health workers, financial and IT professionals and domestic helpers. Since October, about 5,500 Filipinos have lost their jobs overseas, mostly in Taiwan, and the number is expected to rise as the global financial crisis deepens, officials said. Remittance growth is expected to be flat at around $16.4 billion this year after posting double-digit growth in at least the last 6 years. “We remain cautiously hopeful that we can continue to insulate the Philippines from the full frontal assault that much of the world is experiencing,” Arroyo said. “Yet, we realize with each passing day that objective becomes a greater challenge.” The central bank has repeatedly said slowing inflation, which is expected to fall within target this year and the next, would allow authorities to further cut rates after a total 100 basis points reduction in the last two months. The bank, which predicted inflation to come in at 3-5 percent this year, is widely expected to cut rates when it holds a policy meeting on March 5. Weak demand Reflecting the slowdown, the statistics office said imports plunged by a record 34.2 percent to $3.29 billion in December from a year earlier, signaling slowing demand for exports. The country's imports are dominated by electronics that mainly comprise parts used as inputs for exports. The central bank said it expected exports to contract 6-8 percent this year from a near 3 percent drop in 2008 as demand for the country's main semiconductor products from recession-hit markets such as United States and Japan dries up. With imports seen shrinking faster - around 8 to 10 percent this year - than exports and growth in remittances seen to be flat, the central bank said the Philippines will post a balance of payments surplus of $700 million this year, higher than a surplus of $89 million last year.
