By ALBERT CASTRO

Profits of the country’s biggest corporations will drop by an average of one percent for the third quarter pulled down by massive contraction of 61 percent for banks, 28 percent for mining and three percent for properties.

The only companies expected to post robust earnings include food, media and utilities.

Telco profits will inch up by one percent.

Banks even before the US economy spun out of control, have been posting lower profits due to lower foreign exchange gains when the peso weakened. Interest earnings were also down.

Lower profits will be on top of the major shavings in share values.

A study prepared by Jonathan L. Ravelas, analyst of BDO Universal Bank, showed that in every US recession from 1969, local share prices contracted on average by 10 percent, ranging from a low of 2 percent in 1969 to 36 percent in 1980.

The rout in share prices this year is the worst in history at over 47 percent, higher than the 1980 clobbering of 36 percent.

Ravelas said that while it is given that the Philippines cannot escape the impact of the US recession, recovery will be swift because the country has better economic fundamentals.

But fundamentals or not, risks are all on government side. The government has limited resources to stimulate the economy.

Remittances and impending US dollar weakness will slow consumer spending.

Ravelas warned that exports will drop and the business process outsourcing sector’s growth slow down.

On a brighter note, Ravelas said the recovery period is "expected to be shorter."

Ravelas noted that among the "deep cushion" of the economy as the critical mass of overseas Filipino workers.

The agriculture sector can also be a source of growth for the economy, said Ravelas.

He also noted that the country’s workforce and wages are competitive, and that oil and food prices have stabilized.

In the Philippines, among the sector to be affected are exports, particularly electronics and commodities; the property sector as spending will focus on basics; mining, being capital intensive, will be affected by sluggish investor sentiment and softer prices; and tourism/travelling and allied industries, being a discretionary expenditures.

BDO estimates the Philippines’ GDP for 2008 to grow between 4.5 percent to 5 percent. The government targets a growth of between 4.1 percent to 4.8 percent.

The national government deficit is seen at P67 billion, compared to a government target of P60 billion.