Press Release
January 10, 2009

Loren on economy: Guarded optimism, not complacency

Senator Loren Legarda yesterday warned the government against being overconfident in view of manifold pronouncements that the Philippines has healthy economic fundamentals to weather the global downswing.

Loren said that it's okay for the Philippines to be inspired by acclaims, including the "stable" rating given it by Fitch Ratings, but that it should not fall into a false sense of security.

"The financial crisis is still unfolding, and the consensus among local and international experts is that it's going to get worse before it gets better," said Loren.

"So, I think what we should have is guarded optimism," said Loren.

Fitch Ratings had said that the Philippines has no need for external funding in 2009 for its economic undertakings as it can still count on remittance flows from millions of Filipinos working overseas.

Likewise, it said that the public finances had been "well-managed" in the last couple of years.

Just the same, government planners had revised their gross domestic product (GDP) growth projection from 4.7% to 3.7% for this year.

"With the prevailing uncertainty, any effort to project growth rates has doubtful validity and, therefore, has little utility," she said.

"It is best for our government to prepare for the worst so that whether it comes or not, we will be ready. The emphasis should be on economic pump-priming activities centering on job-generation, especially in the countrysides."

She said that the present Middle East crisis is causing oil prices to increase anew in the world market and that this will certainly affect the Philippines negatively.

On Tuesday, oil prices hit $50 per barrel from below $40/barrel due to disruptions to gas supplies across Europe and the continuing conflict between Israeli and Palestinian forces in the Gaza Strip. Loren also cited the pronouncement made by Federal Reserve that the US recession is likely to drag well this year, and its recovery to come in moderate fashion only in 2010.

"The vulnerabilities of big countries' economies should remind us that we are as vulnerable as they are, especially since the US is a major trading partner of our country," she said.

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