MANILA, Philippines - Strong economic growth in the Philippines is expected to give East Asia and the Pacific a boost as the region remains resilient despite the challenging global landscape, multilateral lender World Bank said on Wednesday.
"Developing East Asia, excluding China, is projected to grow 5.6 percent in 2012, up from 4.4 percent in 2011. The rebound in Thailand following the floods in 2011, strong growth in the Philippines, and relatively mild slowdowns in Indonesia and Vietnam contributed to this recovery. Continuing strong performances by Indonesia, Malaysia, and the Philippines will boost Developing East Asia, excluding China, to 5.7 percent in 2013 and 5.8 percent in 2014," the World Bank said.
In its updated East Asia and Pacific Economic Update, the bank expects the Philippines to grow at 6 percent for the year and 6.2 percent in 2013.
"Consumption, which accounts for 75 percent of GDP (gross domestic product), is expected to drive overall growth underpinned by continued growth in remittances and higher government spending with the national elections next year. The current account is projected to remain in surplus, driven by remittances and some recovery in electronics exports early in the year," World Bank said.
It added that the country is in a position to make growth higher and inclusive given the reforms implemented by the government. It said that the combination of strong macroeconomic fundamentals, political stability and a popular government is seen by many to improve the lives of the people.
"Several reforms have successfully started, notably in public financial and debt management, anti-corruption, and tax policy. With further structural reforms, especially in areas which will have more impact on the lives of the poor, along with investments in infrastructure, education, and health, the Philippines can take advantage of new opportunities arising from the global economic rebalancing and the strong growth prospects of the East Asia region," the report said.
However, the report noted that possible delayed reforms in the Eurozone, the fiscal cliff in the United States and a decline in the growth of investments in China pose risks to East Asia and the Pacific's growth momentum.
“If a shock in growth were to occur, most countries could counter the impact by easing their fiscal policies. For economies in the region that face difficulties in budget execution, particularly of the capital budget, fiscal interventions aimed at increasing private domestic demand such as targeted social assistance or investment tax credits, are very important,” World Bank Senior Economist Keiko Kubota said.