World Bank urges Phl to capitalize on East Asia's growth momentum

MANILA, Philippines - The World Bank has urged the Aquino administration to capitalize on East Asia’s growth momentum to steer the domestic economy in an expansion mode within three years.

According to World Bank lead economist for the Philippines Rogier van den Brink, the Philippines must gear up its human resources, infrastructure and complete the agriculture development cycle.

In a media briefing yesterday, Van den Brink said the country’s fundamentals remains strong, and that external shocks may not cause much damage, although the financial meltdown in Europe and the sluggish US economy are causes for concern.

“It is causing a lot of uncertainties for East Asia and the Philippines,” the World Bank economist told media.

However, he said the Philippines remains heavily reliant on private consumption, remittances from overseas Filipinos, and the services sector.

Van den Brink said investments in infrastructure and human capital must be done now.

“It is the right moment to invest in infrastructure project while there is still some interest in investments in these area. There is initial success in raising funds from bond and debt issues for infrastructure. But it can only be sustained with improved revenue collection as well as reforms in the tax system,” he said.

Van den Brink added: “The successful implementation of these key revenue reforms would allow the Philippines to take advantage of new opportunities arising from the global economic rebalancing, given rising production costs in the rest of the region.”

The World Bank said East Asia’s developing economies could face a shock from China’s slowdown and need to boost domestic demand to offset weak exports due to a sluggish US recovery and Europe’s debt crisis.

Overall growth for East Asian economies should decline from last year’s 8.2 percent to a still-robust 7.6 percent, the bank said. The group includes China, South Korea and Southeast Asia and excludes Japan.

“As external demand is likely to remain weak, countries in developing East Asia and Pacific need to rely less on exports and more on domestic demand to maintain high growth,” the bank said.

Excluding China, regional growth should accelerate from last year’s 4.3 percent to 5.2 percent, propelled by Thailand’s rebound from flooding, the bank said in its “East Asia and Pacific Economic Update.”– With AP