MANILA, Philippines - The Philippines is expected to be the second fastest growing economy in developing Asia this year, next only to China, according to a new Asian Development Bank (ADB) report.
In the Asian Development Outlook 2013 update, the ADB raised its 2013 growth forecast for the Philippines to 7%, from its earlier forecast of 6% in April. It also upgraded its 2014 forecast for the Philippines to 6.1% from 5.9%.
In contrast, the ADB lowered its growth forecast for developing Asia to 6% this year, from its earlier forecast of 6.6%, due to softer-than-expected economic activity in China and India as well as global financial jitters of the US quantitative easing program.
In particular, the ADB cut its 2013 growth projections for China to 7.6% from 8.2% in April, and India to 4.7% from 6%.
"Asia and the Pacific 2013 growth will come in below earlier projections due to more moderate activity in the region’s two largest economies (China and India) and effects of QE nervousness...While economic activity will edge back up in 2014, current conditions highlight the need for the region to exercise vigilance to safeguard financial stability in the short term while accelerating structural reforms to sustain economic growth in the longer term," said ADB Chief Economist Changyong Rhee.
The ADB said it downgraded 2013 forecasts for most of Asia, which "still suffers subdued demand from the advanced countries and weaker demand from the PRC (China)."
The Philippines, the report noted, has been growing faster than expected. It was the only Southeast Asian country whose growth forecast was upgraded.
"As the Philippines has grown more quickly than forecast, its growth projection for 2013 as a whole is upgraded from 6.0% to 7.0%," it added.
On the other hand, the ADB downgraded forecasts for other Southeast Asian countries, such as Indonesia (5.7% from 6.4%), Thailand (3.8% from 4.9%) and Malaysia (4.3% from 5.3%). The ADB maintained forecasts for Singapore (2.6%) and Vietnam (5.2%).
"Southeast Asia’s growth will be crimped by the soft performances of its three biggest economies with lackluster exports and moderating investment weighing on Indonesia, Thailand and Malaysia," the report stated.
For Southeast Asia, the ADB lowered the growth forecast for the year by half a percentage point to 4.9%. "In 2014, growth will quicken to 5.3% as investment recovers and exports benefit from improved global trade and recent currency depreciation in several economies," it added.
However, the ADB noted that the Philippines' growth has not generated enough jobs.
"Bucking the regional trend, this economy accelerated in the first half of the year and doubled its current account surplus. Growth in 2013 will be well above that anticipated in ADO 2013. It is seen moderating in 2014 but still outperforming the earlier forecast. Inflation is modest and projected to remain so. However, vigorous growth has not generated adequate employment, allowing the unemployment rate to rise and underemployment to remain high," the report said.
The ADB also pointed out that full-time employment only rose 0.5% and part-time jobs by 4% in the 12 months to July. Unemployment rate rose to 7.3% in July 2013 from 7% a year ago. Poverty rate was still high at 27.9% in 2012, verus 28.6% in 2009.