MANILA — World Bank raised last October 6 the Philippines’s economic growth forecast for this year as US-based lenders expect the country to sustain its robust expansion in the medium term.
World Bank raised its forecast for the Philippines even as it lowered the growth forecast for South East Asia.
WB followed the Asian Development Bank in raising the growth projections for the Philippines while scaling down the assessment for the entire Southeast Asian region.
Last week, the Asian Development Bank raised its growth projection for the Philippines to 7.0% from 6.0% for this year after the economy expanded 7.6% in the first half of the year.
The ADB’s higher growth forecast for the Philippines came as the Manila-based Regional Development Bank downgraded its projection for Southeast Asian growth to 4.7% from 5.7%.
But while the WB sees a much higher gross domestic product (GDP), the World Bank reiterated that the Philippine government needs to create more and better jobs and reduce poverty to attain its high, sustained and inclusive expansion.
“These can be achieved with reforms to enhance competition, protect property rights, simplify regulations, and increase investment in infrastructure, education, and health,” the World Bank said.
The lenders revised upward the Philippine GDP growth forecast to 7.0 percent from an earlier projection of 6.2 percent after the country exceeded most expectations, with first-half expansion of 7.6 percent.
World Bank’s latest forecast is at the high-end of government’s economic growth target this year of 6.0 percent to 7.0 percent.
The bank also revised the country’s 2014 GDP forecast from 6.4 percent to 6.7 percent.
“Private consumption, which comprises over 70 percent of GDP, would continue to drive overall growth on the back of sustained growth of remittances and growth of the business process outsourcing (BPO) industry,” World Bank said.
“A doubling of infrastructure spending from 2.5 percent to 5 percent of GDP by 2016, as announced by the President in his State of the Nation Address, would drive growth of government consumption, and both public and private investments,” it added.
Furthermore, World Bank said improvement in the investment climate would also contribute to higher foreign direct investment (FDI) inflows, which so far have manifested in an 87 percent increase in pledges.