THE most pessimistic growth forecast for 2009 came from the Makati Business Club. A survey among its members showed that the majority of them are expecting a recession in the Philippines in 2009.

The second-most pessimistic forecast was from the Switzerland-based UBS, which predicted a 1.8-percent growth in terms of gross domestic product (GDP).

The government’s latest projection is 3.7 percent to 4.7 percent. Other forecasts range from 3.0 percent to 4.5 percent. Professor Bernardo Villegas of the University of Asia and the Pacific (UA&P) sees a range of 3.8 percent to 4.5 percent, but he said he was more inclined to the high end. Fellow UA&P economics professor Victor Abola predicts a 4-percent GDP growth for 2009.

The World Bank’s updated forecast is 3 percent, similar to Hongkong and Shanghai Bank’s 3 percent to 4 percent and lower than the Asian Development Bank’s 3.5-percent prediction. Citigroup is also expecting a 3-percent growth, which was raised from its earlier forecast of 2.7 percent after the third-quarter economic report that showed GDP grew by 4.6 percent in the third quarter.

What do all these figures tell us? Majority of the forecasts sees the Philippine economy sustaining growth, albeit at a slower pace, despite the worsening global turmoil, which even the World Bank fears would lead to a worldwide recession.

To me, given the current conditions in the global economy, flat growth is not so bad. Given the strengths of the Philippine economy, however, I tend to agree with forecasts of growth. I definitely do not see the Philippines going into recession. And my own forecast is 3-percent to 4-percent GDP growth for 2009.

Exports will, no doubt, continue to suffer, but we have a lot of strengths, such as overseas Filipino workers (OFWs) and their remittances. The Bangko Sentral ng Pilipinas and the economists are predicting a slowdown on the growth rate of remittances. I want to emphasize that the projected slowdown is on the growth rate, which means that remittances will continue to increase in 2009, but not as fast as in previous years.

One reason is that I don’t see mass layoffs of OFWs. Their employers will not just stop their projects and send their workers home because they could encounter difficulties in hiring these workers back once projects are resumed.

Investors like oil companies in the Middle East are capable of financing their projects up to completion, even amid recession in developed countries. They will not put their international reputation at stake.

Chances are that new projects will be shelved, but existing projects will be completed. The completion of ongoing projects will take time.

And then, many of the Filipinos going abroad are medical workers like nurses, doctors, medical technologists and other health professionals. I don’t think they will be sent home because of recession. Actually, these are called recession-proof jobs.

The same applies to accountants—recession does not lighten the accounting requirements of businesses.

With respect to domestic helpers, only employers who are really in dire financial straits will send their workers home. They have been used to having other people wash their dishes, do their laundry and clean their homes. They’ll not send their maids home just because their salaries were cut.

There’s also a unique cultural factor that plays a role in remittances. If OFWs find themselves earning less, chances are that they’ll cut on spending for personal needs. The remittances won’t be touched because these are needed to keep their children in school and to make sure their families do not lack on basic necessities.

So I’m optimistic that remittances will continue to increase in 2009 and provide the safety net for the economy. Remittances will still fuel economic activities such as retailing and housing. In fact, housing continued to grow in 2007—it was no longer fast growth, but growth still.

With respect to business-process outsourcing (BPO), which is also behind the boom in the real-estate industry, recession in the US and other developed countries where the BPO clients are based may result in an initial dislocation, perhaps some uncertainty for BPO companies in the Philippines.

In the long run, however, foreign companies will realize that BPO is one way of keeping operating costs down, which is very important when business is bad. Will American companies —out of nationalism and to give jobs back to Americans—stop BPO operations in the Philippines even if it is more expensive? I doubt it.

The domestic-banking industry remains strong. There’s no reason the banks will not be profitable in 2009, having written off their exposure to debacles abroad in 2008. Anyway, only five or six major banks were exposed to the collapsed Lehman Brothers, and they’re practically all right.

And as long as the banking industry is strong, and with the strong remittances, the real-estate industry, which has been enjoying a boom since 2004, will continue to grow.

In fact, local companies have not reached a level that they are talking of major layoffs. They’re still on the stage of hiring freeze. Bad news for fresh graduates, but at least those employed will be able to keep their jobs.

Another plus factor is population. High population-growth rate has been cited as an obstacle to economic growth, but we can turn this liability into an asset during this crisis.

Our population of 80 million or more makes us the 13th-largest country in the world, and it represents a big market for Philippine industries. Actually, the domestic market accounts for 70 percent of the economy; the foreign market represents only 30 percent.

Now that foreign markets are shutting down, producers should focus on the domestic market to keep their factories operating. Banks, which lost the windfall from securities and foreign-exchange trading, should be encouraged to finance productive enterprises.

Finally, economic managers and economists agree that there is a lag time of at least six months before the impact of the global financial turbulence and economic slowdown will be felt in the Philippines. Of course, the export sector has already felt its impact, but the other sectors of the economy have not.

The delayed effect gives the government and the business sector time to adjust and prepare. The 7.2-percent economic growth in 2007 and the huge profits that companies realized in the past two years make them better prepared to face the current crisis.

The government should continue to pump-prime the economy primarily by implementing job-generating infrastructure projects. The projects will trigger a chain effect on other sectors of the economy.

And so, with strong remittances, a big domestic market, strong and well-capitalized banks and a resilient housing industry, the Philippine economy should be able to sustain growth amid the global recession in 2009, and ride the fast lane during the projected recovery in 2010.

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