MANILA, Philippines - The country’s growth prospects this year and next year are bright, with the Aquino administration’s anti-corruption campaign seen to perk up investor interest, the World Bank (WB) said in a report.
In its June 2011 quarterly report, the World Bank said gross domestic product (GDP) growth “could potentially be higher as the strong focus and early gains of the Aquino administration in tackling corruption and improving the investment climate could boost domestic investment.”
The report added that “investments, private consumption and the services sector are expected to strengthen” and help the country achieve “inclusive or broad-based growth that benefits the poor.”
“Prospects on the supply side remain favorable with manufacturing and construction projected to benefit from the end of the trade disruption linked to Japan’s post-disaster reconstruction, as well as the solid growth forecast for business process outsourcing,” WB senior economist Eric Le Borgne said.
“Increasing mineral prices will provide incentive to fast-track investment and increase production in the mining sector,” he added.
“The agriculture sector is projected to continue being a net contributor to growth,” he added.
The WB report also projected the GDP at 5.0 percent this year and 5.4 percent in 2012.
Private consumption is also expected to increase as more Filipinos receive higher wages or get employed in good-paying industries like business process outsourcing, the WB report said.
In the report, WB Country Director Bert Hofman said the country’s performance “indicates that the country’s economy has already stabilized since the global financial crisis, with more robust and less variable growth.”
He added that “prior to the global recession that started in 2008, the country was perceived to have a weak fiscal position, making it vulnerable to shocks and volatility.”
“The November 2010 upgrading of the country’s sovereign foreign currency rating by Standard and Poor’s and a similar upgrade by Moody’s this June are testaments to this significant improvement,” Hofman said.
He challenged the country’s leaders to “ensure that growth is more inclusive or one that all citizens participate in and benefit from.”
This, he said, requires “enhancing the income-earning opportunities of the poor as well as assist households to participate in markets by enhancing their human capital.”
Greater efforts, the WB said, should be exerted in improving access to education, health, and social protection services, particularly in the poorest regions.
The WB acknowledges that the Aquino administration, in its first year “has taken important reforms towards achieving inclusive growth that included improving the transparency of the public sector budget and of public financial management...”
It also lauded the administration for better governance and for “launching an ambitious public-private partnership program to address infrastructure bottlenecks as well as help foster the development of inclusive sectors such as tourism.”
One of the infrastructure projects that need greater attention, the WB said, is airport development. It said an “open skies” policy should complement airport development to “enable international tourists to reach tourism hot spots in the Philippines directly, thus generating jobs for the poor as well as business opportunities for micro and small enterprises.”
The WB also hailed the government’s “reshuffle of social protection resources away from wasteful and ineffective programs, towards the well-targeted conditional cash transfer program.”
By end-2011, the program called Pantawid Pamilyang Pilipino Program is expected to cover 60 percent of the poor.