Editorial

Escaping recession

There is not much to crow over the economic growth rate of 4.6 percent in 2008, especially when one compares it to the phenomenal 7.2-percent record just a year ago. But the Philippines managed well in the face of a spreading recession in Japan and the worst economic performance of the United States in 25 years.

The Philippines did escape recession in 2008 and is poised to grow by 3 percent to 4 percent this year despite reduced export sales and layoffs in the local electronics industry.

The Philippine economy, to a fault, does not rely heavily on exports. It is not as vibrant as those of Thailand, Singapore and Malaysia, whose exports are a major driving force in their economy.

The Philippines still relies on its domestic economy, unable to keep pace with its export-driven neighbors in Asia. Its weakness, however, has served as a blessing in disguise. The Philippine economy slowed down in 2008 because of reduced demand from overseas, but key local sectors picked up the slack.

An economic analyst said the Philippines ?will be better insulated from the collapse of external demand compared with other Asian economies,? as exports accounted for just a third of economic output.

?What saved us [from a recession] was the domestic economy,? Economic Planning Secretary Ralph Recto agrees, adding that construction, real estate, food manufacturing, trade and outsourcing were the bright spots last year.

Escaping recession amid the global credit crunch is a respectable feat. But policy makers must assess the current economic situation with an eye toward the economic recovery phase. When the global recession fans out, export-driven Asian countries are expected to rebound strongly and try to outpace each other in meeting rising demand from developed nations.

The Philippines, too, is expected to get out of its slumber but its weak export base may not be enough to make a significant dent on economic growth. Policy makers, thus, should continuously examine the economic areas where the Philippines can enjoy a decisive advantage over its Asian neighbors. The country should be ready to join the fray once the global economy starts to rebound.