PHL growth rate for 2012 to breach 6%

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Category: Top News

Published on Wednesday, 19 December 2012 20:56

Written by Max V. de Leon | Reporter

The World Bank (WB) has raised again its economic growth forecast for the Philippines for this year to “over” 6 percent, as it cited the country as being one of the fastest-growing economies in East Asia.

The multilateral lender earlier projected that the Philippine economy, as measured by gross domestic product (GDP), will grow by 4.2 percent in May, 4.6 percent in July and 5 percent in October.

“Stronger macroeconomic fundamentals, in particular, as seen in low inflation, and large current-account surpluses and foreign-exchange reserves, have continued to shield the economy from external headwinds, while a more diversified export basket allowed overall exports to grow despite the decline in electronics exports. Overall, the economy is expected to expand by over 6 percent this year from 3.9 percent last year,” the bank said in its latest East Asia and Pacific Economic Update released on Wednesday.

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The official government forecast for the year was retained at 5.5-percent to 6-percent GDP growth, although the National Economic and Development Authority (Neda) said the upper end of the target can now be easily breached after the economy expanded by 6.5 percent for the first three quarters of 2012.

The World Bank said the higher economic growth, capped by the 7.1-percent increment in the third quarter of the year, was driven by the strong performance of the construction sector and buoyed by robust private consumption and the recovery of government spending.

The bank added that 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,” it said.

Bert Hofman, World Bank chief economist for East Asia and Pacific, said the East Asia and Pacific region is becoming increasingly important for the world economy, and is expected to contribute almost 40 percent of global growth in 2012.

“With high growth rates sustained in the region, we expect poverty to continue to decline. The share of people living under $2 a day in the region is forecast to reach 23.3 percent by the end of 2014, down significantly from 28.8 [percent]in 2010,” he added.

The World Bank expects the Philippines to sustain its high economic growth and make it more inclusive moving forward if the country will continue to aggressively pursue its economic reforms and create more and better jobs and reduce poverty at a faster rate.

The country also needs to raise more revenues to finance higher spending in physical and human capital.

“Baseline growth projection for the Philippines is at 6.0 percent for 2012 and 6.2 percent for 2013. Consumption, which accounts for 75 percent of GDP, 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,” the World Bank said.

It added that a window of opportunity exists to accelerate reforms that become a platform for more inclusive and higher growth in the Philippines.

The country, the bank said, is benefiting from strong macroeconomic fundamentals, political stability and a popular government that is seen by many as committed to improving 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 [and] 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,” it added.