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December 29, 2008, 11:27
Besides, the country's external debt stood at as high as 53.5 billion dollars as of the end of September.
Foreign direct investments continued to flow into the economy as of September, but lower than the year-ago level due to uncertainties amid the spreading financial crisis.
The January-September tally reached just 1.39 billion dollars, 45 percent less than the 2.52-billion-dollar net inflows recorded in the same period of last year.
The BSP expects a 2.6-billion-dollar net inflow of foreign direct investments by year-end, compared to last year's 2.7 billion dollars.
As one of the few bright lights amid the doom and gloom of the global crisis, the business process outsourcing (BPO) industry is expected to grow by 40 percent this year in the Philippines, with revenues of around 7 billion dollars.
Industry experts say that the U.S. recession would result in more BPO investments in the Philippines since more companies would cut costs by outsourcing some of their functions to the underdeveloped, English-speaking country. But no one believes that the industry, still in its infancy, alone will save the country's economy.
What the Philippines depends more on is the remittances of the overseas Filipinos.
More than 8 million Filipinos are living and working abroad, who remitted more than 13.7 billion dollars to the local economy from January to October this year and are expected to send a total of 16.9 billion dollars by the end of the year, 13 percent higher than in 2007. Marianito Roque, Secretary of the Department of Labor and Employment, attributed the increase to the larger number of Filipino workers deployed overseas this year.
Approximately 25.5 percent more Filipinos were deployed during the first ten months to 1.15 million this year from 888,339 last year.
Remittances from overseas Filipinos provide a buffer for the country's economy against the impact of the global turmoil.
However, some analysts forecast a sharp fall of incoming remittances after the Christmas season as a result of recession in countries hosting a large number of Filipino workers.
According to Teresa Soriano, Assistant Secretary of the labor department, more than half a million overseas Filipino workers are at risk of losing their jobs amid the global meltdown.
Of the figure, 268,000 are factory workers from South Korea, and China's Taiwan and Macao; 130,000 are cruise ship workers; 129,000 are those holding temporary work visas in the United States; and the remaining 48,000 are household service workers in Singapore, and China's Hong Kong and Macao.
Consumer spending, the main driver of domestic expansion and driven by the overseas remittances, had slowed considerably as investment spending did, and is expected to slow down further without sufficient lifeblood.
According to the government, the Philippine economy is likely to expand 3.7 percent to 4.7 percent next year.
The Asian Development Bank painted a grimmer picture, citing weak exports and lower private consumption as the slowdown's main culprits.
In its latest Asia Economic Monitor report, the bank forecast that the Philippines' economic output will post a sluggish growth of 3.5 percent.
Some other economists are even more pessimistic.
Private think-tank Economist Intelligence Unit said the Philippines will only expand by 1.8 percent in 2009.
The country will be plagued with higher unemployment and lackluster domestic consumption, according to the research and advisory company, with more than 40 offices worldwide.
"Weaker external demand and domestic investment will lead to higher unemployment and will constrain consumption growth," it added.
Investments in the emerging economy are also seen to decline as foreign direct investments slow and Philippine companies encounter difficulty to raise capital from international markets.
Moreover, the think-tank said that overseas remittances will be sluggish, diluting its strength to prop up domestic consumption in the country.
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