World Bank and Asian Development Bank's forecast for the Philippine economic growth for 2013 and 2014
The World Bank expects the Philippine economy to expand by 6.2 percent this year and 6.4 percent in 2014, with the growth to be supported by the country's strong economic fundamentals.
The WB estimate is higher than the ADB forecast of 6 percent for this year and 5.9 percent for next year.
In its "East Asia and Pacific Economic Update" report released yesterday, World Bank cited the Philippines as one of the middle-income countries in the East Asia and Pacific region that outperformed expectations last year.
"The Philippines led the ASEAN-4, accelerating from 3.9 percent GDP growth in 2011 to 6.6 percent in 2012, spurred by robust private consumption, a recovery in government spending, strong performance of the construction sector and of exports," World Bank said.
With the country's robust performance last year, World Bank maintained its outlook for the Philippines, unchanged from the forecasts it made in December 2012.
The World Bank's 6.2 percent forecast for this year is within the national government's 6 to 7 percent growth target for this period.
"In the Philippines, the fundamentals remain strong, policy responses have been appropriate so far, and reform efforts by the government appear sustainable," the report said.
The Asian Development Bank earlier revised upwards its forecast for the Philippines to 6 percent for 2013 from its previous outlook of 5 percent.
For 2014, ADB expects the Philippine economy to expand at a slower pace of 5.9 percent.
ADB said that strong consumption and rising investments are expected to boost the Philippine economic performance this year.
It added that the upbeat business and consumer sentiment will support growth. Fiscal spending will remain robust, along with construction activity, driven by the strong demand for housing and office space.
Both the World Bank and ADB also cited the first investment grade credit rating recently given by Fitch Ratings for the Philippines, which is expected to improve the investment climate.
However, World Bank said that to sustain and increase inclusive growth in the developing East Asia and Pacific region over the medium-term, investments in both infrastructure and in skills must be increased.
The agency said that raising the levels of investment would raise growth prospects in the region.
"In the Philippines, lagging infrastructure development is a long-standing impediment to private investment," the report said.
"Catching up on government infrastructure spending will provide the fiscal spark that is still missing in the country's growth path, although infrastructure spending is gearing up recently. In 2012 it was equivalent to 2.4 percent of GDP, up from 1.6 percent of GDP in 2011," World Bank said.
Presidential Spokesman Edwin Lacierda yesterday said while the World Bank's growth forecast of 6.2 percent for the Philippines is at the lower end of the country's own growth forecast of six to seven percent, it still recognizes that correct measures are being done by the Aquino government to continue to improve and grow the economy.
Lacierda said Malacanang still welcomes the growth forecast of the World Bank but the Aquino government will continue to hope and strive to reach its target of six to seven percent growth this year.
"Certainly, we welcome that. I think that's a lowside of our forecast. Our forecast is around six to seven percent. But, certainly, it's a welcome recognition on the part of World Bank that the Philippines has been taking the correct steps in improving the economy and also in having equitable progress for the—for our countrymen," he said.
The World Bank has maintained its GDP forecasts of 6.2 percent for the Philippines citing that the country continues to show signs of sustained growth.
It also forecasted growth of 6.4 percent and 6.3 percent for the Philippines in 2014 and 2015 respectively.
World Bank also projected that regional growth would rise moderately to 7.8 percent in 2013 and ease to 7.6 percent in 2014.
With report from Malaya Business Insight