World Bank raises Philippines' 2010 growth forecast to 6.2%

by Jun Vallecera, Business Mirror

Posted at Oct 20 2010 10:11 AM | Updated as of Oct 20 2010 11:34 PM

MANILA, Philippines - From its original growth forecast of 4.4% in terms of local output or the gross domestic product this year, the World Bank raised on Tuesday the country’s growth outlook to 6.2%.

Bert Hofman, World Bank country representative to the Philippines, cited the bullish outlook as he announced the doubling of its program and project loans to the country this year.

Hofman said actual growth in the first half was driven by a rebound in exports and by domestic consumption that allowed the economy to expand by 7.9% in the second quarter from 7.8% in the first.

At its Philippine Quarterly Update released on Tuesday, the World Bank said consumption, investments and remittances from millions of overseas Filipinos were to “further buoy domestic demand during the remainder of the year.”

“We do see robust recovery in the Philippines this year. Its growth prospects are quite solid,” Eric Le Borgne, World Bank senior country economist, said.

Both officials said private-sector investments, trade flows and economic confidence in East Asia and the Pacific are driving growth prospects higher and likely average 8.9% this year or higher than the region’s 7.3% expansion just last year.

“The global recession has demonstrated improvements in the Philippines’ macrofinancial resiliency, thanks to a remarkably robust external position. This is attributed to sound macrofundamentals—especially the banking system, corporate sector, balance of payments and fiscal and monetary space—coupled with growing remittance flows,” Le Borgne said.

But because the fiscal and monetary stimulus package put in place earlier is even now being withdrawn in orderly fashion, growth in the second half should be slower than 7.9%, Le Borgne said.

He also said while actual growth is accelerating, the incidence of poverty and hunger in the country remains high.

The World Bank said the condition of high and growing income inequality, unequal sector and regional distribution of growth and barriers to mobility across sectors and regions “structurally explains this trend.”

Add to these were shocks such as El Niño helping slow progress in tackling poverty in the country.

Nevertheless, Hofman said the Philippines exited the global financial crisis that started two years ago in more favorable fiscal and monetary condition than at entry.

He said the country now has a stronger balance-of-payments surplus, higher gross international reserves, resilient remittance inflows and a government committed to reducing the extent of its budget imbalance over the next three years..

Bert Hofman, World Bank country representative to the Philippines, cited the bullish outlook as he announced the doubling of its program and project loans to the country this year.

Hofman said actual growth in the first half was driven by a rebound in exports and by domestic consumption that allowed the economy to expand by 7.9% in the second quarter from 7.8% in the first.

At its Philippine Quarterly Update released on Tuesday, the World Bank said consumption, investments and remittances from millions of overseas Filipinos were to “further buoy domestic demand during the remainder of the year.”

“We do see robust recovery in the Philippines this year. Its growth prospects are quite solid,” Eric Le Borgne, World Bank senior country economist, said.

Both officials said private-sector investments, trade flows and economic confidence in East Asia and the Pacific are driving growth prospects higher and likely average 8.9% this year or higher than the region’s 7.3% expansion just last year.

“The global recession has demonstrated improvements in the Philippines’ macrofinancial resiliency, thanks to a remarkably robust external position. This is attributed to sound macrofundamentals—especially the banking system, corporate sector, balance of payments and fiscal and monetary space—coupled with growing remittance flows,” Le Borgne said.

But because the fiscal and monetary stimulus package put in place earlier is even now being withdrawn in orderly fashion, growth in the second half should be slower than 7.9%, Le Borgne said.

He also said while actual growth is accelerating, the incidence of poverty and hunger in the country remains high.

The World Bank said the condition of high and growing income inequality, unequal sector and regional distribution of growth and barriers to mobility across sectors and regions “structurally explains this trend.”

Add to these were shocks such as El Niño helping slow progress in tackling poverty in the country.

Nevertheless, Hofman said the Philippines exited the global financial crisis that started two years ago in more favorable fiscal and monetary condition than at entry.

He said the country now has a stronger balance-of-payments surplus, higher gross international reserves, resilient remittance inflows and a government committed to reducing the extent of its budget imbalance over the next three years.