Palace downplays Moody's forecast of RP recession

MANILA, Philippines - Malacañang downplayed yesterday the forecast of an economist from Moody’s Investors Service about the strong possibility of the country going into a recession this year.

The two deputy presidential spokespersons on economic affairs Gary Olivar and Rolando Tungpalan gave different opinions about the statements made by the economist but shared the same optimism about the state of the Philippine economy.

Tungpalan said that the country is not counting on miracles as a way out of a possible recession, just like what was stated by Nikhilesh Bhattacharyya, associate economist at Moody’s Economy.com, the research arm of Moody’s Investors Service.

“We expect our infrastructure and social protection programs under our economic resiliency plan to boost public spending starting the second quarter and savings transforming to consumption in the next quarters,” said Tungpalan, who is deputy director general of the National Economic and Development Authority.

“Many sectors are more optimistic now than we were during the first quarter,” he added.

According to the economist from Moody’s, it would take a miracle for the Philippines to avoid going into a recession this year. The economist argued that slow growth in private consumption and the low level of investments would make it close to impossible for the Philippine economy to expand this year.

Olivar, for his part, would rather ignore the gloomy forecast of the economist. “I’ve learned to be much more sanguine about the rating agencies’ projections ever since the collapse of the subprime mortgage instruments, many of which were rated triple A by the likes of Moody’s,” Olivar said.

Secretary to the Cabinet Silvestre Bello III said that Moody’s is entitled to its own opinion but based on the analysis made by the President’s economic managers, a rebound should even be expected during the second half of the year.

“They are saying that the economic meltdown has been in what we call a rebound mode. What this means is that we were expecting a longer recession period, but what happened is that we are now expecting a rebound within a shorter period,” Bello said.

“Of course we are concerned about this statement but then we have to rely on the analysis of our own economic advisers because in the end, we are the ones who would get hit if our analysis is wrong,” he added.