The Joint Foreign Chambers of the Philippines (JFC) is not expecting the economy to slip into recession this year, thanks to the country's strong remittance inflows and revenues from the information technology (IT) services sector.

In a report released Monday, the seven-member chamber said money sent home by overseas Filipino workers (OFW) and revenues from the IT-enabled services sector will support the continued growth of domestic consumption, allowing the Philippines to show positive gross domestic product (GDP) growth in 2009.

"There is a chance of mild recession should global recovery be slow and remittance and service revenue flows deteriorate more than expected. But this seems unlikely," the report said.

"The archipelago is the leader in East Asia in the deployment of overseas workers and in the IT-enabled services sector," it added. Last month, consulting firm Ovum Plc. said government initiatives for technology adoption will drive the growth of the country's IT sector.

OFW remittances hit a record $1.47 billion in March from $1.3 billion recorded in the previous month. Its growth rate, however, slowed to 3.04 percent as traditionally strong remittance sources, such as the United States and the Middle East, contracted or were flat.

For the full year, the central bank is expecting a flat growth in remittances, while the International Monetary Fund projected a 7.1-percent decline. However, JFC said the growth of remittance inflows remain positive for the first three months of the year at 2.6 percent.

"We expect remittances to return gradually over several years to 2008 volumes and to grow in rough proportion to global economic recovery," JFC said. Last year, remittances increased 14 percent to $16.4 billion, accounting for 10 percent of GDP.

Meanwhile, JFC said the upcoming national elections will also boost the country's GDP by less than 1 percent.

"Election spending should have a booster shot effect on GDP. But any recurrence of serious political intability could be a negative tipping point. Such risks require vigilance and avoidance of complacency," the report said.

Slow growth

JFC's position in the report remains unchanged even as the National Statistics Coordination Board (NSCB) reported a 0.4-percent GDP growth for the first three months of the year, the lowest since the Asian financial crisis.

The latest figure was much worse than the government's 1.8 to 2.8 percent quarterly projection. But while the country is still posting positive growths, NSCB secretary general Romulo Virola said the Philippines is already on "the brink of recession" not just based on GDP rates but on worrisome May to June leading economic indicators.

The indicators include the consumer price index, electricity consumption, exchange rate, hotel occupancy rate, money supply, number of new business incorporations, stock price index, terms of trade index, total imports, tourist arrivals and wholesale price index.

Technically, a country slips into recession when it posts negative GDP growth for two consecutive quarters.

Still, European Chamber of Commerce of the Philippines (ECCP) President Huber d' Aboville warned that the country may continue to post slow GDP growth for several years as a result of the crisis.

"We face the consequences of the worst global recession in 70 years. It is unlikely that the Philippines will enter into recession, but we think growth will be slow for several years," he said in a press conference on Monday.

Meanwhile, the ECCP President said it would take at least two years for the global economy to recover from the crisis, depending on improvements seen in North America, Europe, and Japan. "Fortunately, China and India are still growing strongly."

Aside from ECCP, the JFC is composed of the American Chamber of Commerce of the Philippines, the Australian-New Zealand Chamber of Commerce (Philippines), the Canadian Chamber of Commerce of the Philippines, the Japanese Chamber of Commerce and Industry of the Philippines, the Korean Chamber of Commerce of the Philippines, and the Philippine Association of Multinational Companies.