World Bank: Slow gov't spending cuts 2014 Phl growth forecast

MANILA, Philippines - Slower government spending and lower farm production prompted the World Bank to revise its 2014 growth forecast for the Philippines.

In its latest Philippine Economic Update, the multilateral financial institution brought down its 2014 growth forecast for the Philippines from 6.4 percent to 6 percent, but expects gross domestic product growth to rebound this year and in 2016.

“The Philippines has what it takes to sustain this high level of growth for many years,” said World Bank Country Director Motoo Konishi. “The country is benefiting from low and stable inflation, its finances are healthy, and debt levels are declining. It has a dynamic private sector that is seizing global opportunities. Now is the time to move the economy decisively onto a path that reduces poverty and creates more and better jobs.”

The bank said the country's strong growth in the previous years have translated to job creation and improvement in the lives of the poor. Data from the latest Labor Force Survey showed that over a million jobs were created in October 2014, higher than what was posted the same month the previous year.

The World Bank added that government data also showed that the real wage income of the poorest 20 percent of the population grew by almost 10 percent compared to only 2.4 percent for the upper 80 percent, while underemployment among the poor declined significantly in 2013, coinciding with the improvement in poverty incidence.

“If growth is sustained at 6 percent per year and the current rate at which growth reduces poverty is maintained, poverty could be eradicated within a single generation,” said World Bank Lead Economist Rogier van den Brink.

In its report, the bank said the Philippines has to increase investments in infrastructure, health and education; enhance competition to level the playing field; make regulations simpler to promote job creation especially for micro and small businesses; and protect property rights.

"For these reforms to succeed, strengthening tax administration and improving transparency and accountability of government spending are essential,” Chua said. “These would allow the Filipino people to see a better link between taxes and services and convince them that the taxes they are paying are being spent wisely,” said Karl Kendrick Chua, World Bank senior country economist.