by Prime Sarmiento MANILA, Sept. 22 (Xinhua) -- The Asian Development Bank (ADB) forecasts that the Philippine economy will slow to 1.6 percent this year as concerns over job security reined in consumer spending. The latest ADB forecast, which was issued on Tuesday, is lower than the 2.5 percent growth forecast it presented in March. ADB said that a slowdown private consumption combined with falling exports and weak investment environment will weigh on the country's economy for the rest of the year. 'Private consumption growth in the first half pulled back to 1. 8 percent year on year, from 4.6 percent in the first half of 2008. The pace of increase in remittances from overseas workers slowed to 2.9 percent in U.S. dollar terms, although this translated to growth of 17.1 percent in pesos,' the ADB said in its flagship economic report Asian Development Outlook 2009 issued on Tuesday. The Philippines is among the world's biggest labor exporters and remittances is a key factor in its consumption-driven economy. The global recession led to massive lay-offs in the U.S. and Western Europe -- where most overseas Filipino workers are based. The Philippine Overseas Employment Administration said that less than 1 percent of the nearly 9 million Filipinos abroad lost their jobs. But this fact didn't assuage most Filipino consumers, slackening consumption and slowed economic growth to 1 percent in the first half.'Concerns over job security eroded consumer confidence,' the ADB said. Despite such modest growth projections for the whole year, the Manila-based lender is optimistic that the Philippine GDP will expand by 2.2 percent in the second half. 'There were positive factors, though, such as the steady growth in remittances and business process outsourcing services, stability in domestic financial markets and strength in external liquidity position,' said Neeraj Jain, Country Director of ADB's Philippines Country Office. 'Recent improvements in business and consumer sentiment are also encouraging.' The ADB expects domestic consumption to recover in the second half thanks the fiscal stimulus package implemented by the government,benign inflation levels (the ADB expects inflation to be at 3.2 percent in 2009), monetary easing policies and news that the global economy is improving. These factors combined with election spending -- on back of the May national elections -- will also push the Philippine GDP to expand by 3.3 percent in 2010. But there are downside risks. For one, the expected global recovery in the 2010 may be weaker than anticipated, which will hurt both consumer and business sentiment. The ADB believes that while the government's stimulus program helped in boosting consumption, it also led to a significant deficit.Dwindling revenues can't keep with increased government spending. Last week, the Philippine finance department said that the fiscal deficit in the first eight months hit over 200 billion pesos (about 4 billion U.S. dollars). ADB Assistant Chief Economist Joseph Ernest Zveglich Jr. said that it's crucial for the government to improve tax collection to enable the government to continue with its stimulus program. 'It's a difficult balance. How long will the government continue implementing the stimulus program will depend on how long the downturn is,' Zveglich said in a press briefing. Another major downside risk is the 2010 elections. Uncertainties leading up to the May 2010 elections will likely keep private investment subdued. But Jain said that a smooth election and transition in government in May will help in promoting economic recovery. 'A predictable environment for investors always fosters business and consumer confidence,' he said. 