(Photo from AFP)

If you believe the National Economic Development Authority (NEDA), businesses in the consumer sector will continue to have a profitable year in 2008, despite the appreciation of the peso.

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MANILA, Philippines — The National Economic and Development Authority (NEDA) has downplayed concerns that consumer spending, a major growth driver of the economy, may be dampened this year by the continuing strengthening of the peso.

Myrna Asuncion, NEDA director for policy and planning, said personal consumption would remain a major contributor to the country’s economic growth this year.

“Although [the value of] remittances shrinks with the appreciation of the peso, more Filipinos are landing higher-quality jobs that provide better salaries,” Asuncion told reporters Thursday on the sidelines of the NEDA news briefing on the economy’s performance in 2007.
Better salaries mean that these overseas Filipino workers (OFWs) can send more dollars to their families in the Philippines, thus sustaining the growth in personal consumption.

Also expected to fuel growth in personal consumption this year is the expected increase in the number of employed Filipinos.

The National Statistics Office, an attached agency of the NEDA, earlier reported that unemployment rate settled at 6.3 percent of the country’s labor force in October last year, marking a full percentage-point drop from the 7.3 percent recorded in the same month in 2006.
The peso has risen by close to 20 percent last year and this means that more dollars are needed to pay for local goods and services.

This gave rise to fears that personal consumption would be constrained this year, as many Filipino families rely heavily on money remitted ances brought in by some eight million OFWs.

In 2007, personal consumption grew 6.0 percent, compared with 5.5 percent in 2006.

The faster growth in consumer spending was credited partly to the unabated increase in remittances from OFWs.

Net factor income from abroad, which includes remittances from OFWs, grew 12.6 percent in 2007, slowing down from 13.3 percent in 2006. Critics said the slower growth could eventually pull down growth of personal consumption.