World Bank upgrades Phl growth forecast despite regional slowdown

MANILA, Philippines - The World Bank upgraded on Monday its economic growth forecast for the Philippines despite a looming slowdown in the economies of East Asia and the Pacific.

The Washington-based lender said the country's gross domestic product (GDP), boosted by consumption and resilient remittances, is expected to grow at 7 percent this year, higher than its previous forecast of 6.2 percent. For 2014, the bank similarly upgraded its forecast from 6.4 percent to 6.7 percent, while it expects the Philippines to post a 6.8-percent GDP growth in 2015.

The country's growth forecast for 2013 is higher than that of Indonesia (5.6 percent), Malaysia (4.3 percent), Thailand (4 percent) and Vietnam (5.3 percent).

The bank added that economies in the East Asia and Pacific region are expected to slow down from the 7.5-percent growth last year to 7.1 percent in 2013.

Despite the downtrend, however, the multilateral financial institution still expects the region to lead global growth this year.

"While the pace of growth is slowing, the region will still contribute 40 percent of global growth and one-third of global trade this year— higher than any other region in the world," the bank said.

Global growth, on the other hand, is expected to hit 2.3 percent this year, down from the 2.5 percent posted in 2012. The bank, however, expects a bounce in 2014 and 2015, when the world economy is forecast to hit 3.1 percent and 3.4 percent, respectively.

The World Bank said immediate risks include the uncertainty caused by the fiscal deadlock in the United States, the impact of the withdrawal of stimulus from advanced economies and an abrupt slowdown of investments in China.

“The Federal Reserve’s decision to delay tapering stabilized markets for now, giving countries a second opportunity to take measures to lower risks from future volatility. Reducing reliance on short term and foreign currency denominated debt, accepting a weaker exchange rate when growth is below potential, and building policy buffers to respond to changing global liquidity conditions are some of the ways that can help countries be prepared," Bert Hofman, World Bank East Asia and Pacific chief economist said.