WB raises RP growth outlook
MANILA, Philippines - The World Bank has revised upwards its growth outlook for the Philippines to seven percent this year, from an earlier forecast of 6.2 percent, even as the rest of developing economies in Asia face the prospects of slower growth.
In its latest East Asia and Pacific Economic Update, the World Bank said the Philippines will stand out in the region as the country is expected to buck the regional growth slowdown in the next three years.
“The Philippines is bucking the trend,†Rogier van den Brink, World Bank lead economist for the Philippines, said in a briefing yesterday.
He said the positive forecast for the country is attributed to strong private consumption on the back of vibrant remittances, continuing expansion of business process outsourcing, and increasing government spending on infrastructure.
The World Bank report comes barely a week after another multilateral financial institution, the Asian Development Bank, similarly upgraded its 2013 growth forecast for the Philippines, while cutting the outlook in the rest of the emerging economies in Asia.
The ADB hiked its gross domestic product (GDP) growth forecast to seven percent from an earlier six percent, citing strong domestic consumption, remittances and investments as main drivers of growth.
Van den Brink said the Philippines’ strong macroeconomic fundamentals, characterized by low and stable inflation, healthy external balance and stronger government finances have shielded the economy from the persistent weaknesses in the global economy.
“Reforms to enhance competition, protect property rights, simplify business regulations, and increase investment in infrastructure, education and health will boost the Philippines’ efforts to achieve inclusive growth – the type that creates more and better jobs and reduces poverty,†added Motoo Konishi, World Bank country director for the Philippines.
However, van den Brink said the seven percent growth rate for the Philippines still falls short from levels that would result in sustained economic growth and significant poverty reduction.
“A seven percent growth rate is not enough in creating structures in poverty reduction,†he noted.
He pointed out that for developing countries like the Philippines, the normal growth path starts with the agriculture sector which hosts the largest segment of society. As the government focuses on the agriculture sector, it develops more businesses leading to an improvement in poverty and education.
At the same time, the manufacturing sector offers opportunities for employment from the countryside. Thus the quality of employment improves for the manufacturing sector—both domestic and foreign-led.
“But that has not happened in the Philippines. Manufacturing has not taken off while the agriculture sector is still stuck in the mud,†the World Bank economist said.
The World Bank officials likewise urged the Philippines to forge a broad coalition between the national government, the local government units, labor, civil society and the private business sector.
The coalition would craft and implement structural and fiscal reforms that would address issues such as over- taxation, tax exemptions and incentives, simplification of start-ups, to sustaining business for both domestic and foreign firms.
“The Philippines must also invest in investing, that is, investing in education, health and infrastructure, ensures a strong, skilled and young work forces,†Van din Brink said, adding that the Philippines has one of the youngest work force in the world.
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