A flat growth for the Philippines this year, as projected by the International Monetary Fund (IMF), is unlikely to happen, according to Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco.

According to Tetangco, the IMF has been underestimating the country's gross domestic product (GDP) growth for the past seven years by about 0.5 percent.

"There are fundamental forces in the economy that would help it to withstand global shocks and avoid a major slippage in growth," he said.

The IMF on Wednesday has lowered its 2009 growth projection for the Philippine economy. In its latest World Economic Outlook, the IMF has revised its GDP growth to zero after its 2.25 percent forecast made only in February.

Tetangco said the strength of domestic demand would help the country recover from the ongoing crisis. He added that personal consumption, which accounts for more than two-thirds of the economy, has been historically firm, with private spending resilient across business cycles.

"The only time in the past 30 years that private consumption contracted was in 1985, when the economy underwent external debt restructuring," he said.

The IMF did not project a decline in private consumption, but resident representative Dennis Botman said there would a slowdown in growth to about 2.7 percent this year.

However, Tetangco said private consumption would continue to grow this year due to the country's young and economically active population. He added that the country's export industry, remittances, and outsourcing sectors will be less vulnerable to the crisis despite its exposure to more difficult global conditions.

According to Tetangco, the country is less dependent on external demand compared to its Asian neighbors, citing the country's exports-to-GDP ratio at 29 percent last year compared to 49 percent in 2000.

Meanwhile, Tetangco said the shift to high-value services alongside the increasing need to outsource non-core business activities in firms from advanced economies would propel the growth of the country's business process outsourcing industry in 2009.

Remittances won't be as hard-hit

Tetangco said remittances will not be as hard-hit by the crisis as shown by the IMF's projected 7.1-percent decline this year from its previous flat-growth forecast.

With the continued increase in the deployment of workers abroad, he said more money would be sent back to the country.

The growth of remittance inflows reached 4.9 percent in February this year, a slight recovery from the near-flat growth of 0.1 percent in the previous month. It was, however, the slowest growth rate since February 2003 at 3.7 percent.

The BSP is banking on high deployment of overseas Filipino workers (OFW) for the continued hike in remittances. But the Philippine Association of Service Exporters Inc. earlier reported that job orders for OFWs have slowed down this year, with 70 of their 700 recruitment agencies already shut down.

The Philippine Overseas Employment Agency counts OFWs who are newly hired for a job and those who are re-hired for the same job in their deployment data. Newly-hired OFWs do not usually send money home on their first few months, so there tends to be a lag between their deployment and remittances attributed to them.