World Bank raises anew Phl growth forecast

MANILA, Philippines - The World Bank raised anew its growth forecast for the Philippines this year to six percent, a marked improvement from the five-percent projection it made just last October.

In its latest East Asia and Pacific Economic Update released yesterday, the multilateral lender took note of the country’s strong growth in the first three quarters, which it said could be sustained.

“Consumption, which accounts for 75 percent of gross domestic product (GDP), is expected to drive overall growth underpinned by continued growth in remittances and higher government spending with the national elections next year,” the World Bank said.

Economic planning agency National Economic and Development Authority (NEDA) earlier said the Philippine economy will likely exceed its target growth rate five to six percent this year, after third quarter GDP grew an impressive 7.1 percent compared with the same period last year.

“We posted the fastest economic growth within the ASEAN region. We are well on our way to surpassing our growth target of five to six percent this year and this economic expansion continues to be broad-based, as almost all sectors posted higher year-on-year growth rates,” said Socioeconomic Planning Secretary Arsenio M. Balisacan.

The faster-than-expected growth in the third quarter brought GDP growth to 6.5 percent in the nine months to September.

The World Bank pointed out that the country’s high growth could be sustained and made more inclusive as long as economic reforms are aggressively pursued to create more and better jobs and reduce poverty at a faster pace; more revenues are raised to finance higher spending in physical and human capital; and global growth is supportive and rebalancing in the region continues.

It added that risks to the growth forecasts remain on the downside as the continued high levels of global economic uncertainty combined with weak economic activities in the US, Europe and Japan, the looming “fiscal cliff” in the US, and a slowing Chinese economy are weighing down on global growth prospects.

Meanwhile, the Washington-based lender said the East Asia and Pacific region is forecast to expand by 7.5 percent in 2012, slower than the 8.3 percent experienced in 2011.

However, it noted that East Asia and the Pacific will experience the highest growth rate in the developing nations, and constitutes almost 40 percent of global growth.

The region’s growth slowdown resulted from China’s economic performance, which is projected to reach 7.9 percent in 2012, 1.4 percentage points lower than 2011 and the lowest annual growth rate since 1999. This decline is mainly due to lower domestic demand growth in the first part of 2012, driven by stabilization measures implemented in 2011.

“East Asia excluding China is expected to grow by 5.6 percent in 2012, one percentage point higher than in 2011. The rebound in economic activity in Thailand following the floods of 2011, strong growth in the Philippines, and relatively mild slowdowns in Indonesia and Vietnam contributed to this increase,” the report added.