World Bank raises RP economic forecast to 6.2%

The World Bank on Tuesday raised its 2010 Philippine economic outlook, saying the economy will grow 6.2 percent in terms of the gross domestic product from an earlier forecast of 4.4 percent. World Bank country representative to the Philippines Bert Hofman also said that the bank is raising its program and project loans for the country by 100 percent. The Philippine economy grew by 7.9 percent in the second quarter and by 7.8 percent in the first three months owing to domestic consumption and a rebound in exports, Hofman said in the bank’s Philippine Quarterly Update released Tuesday. Consumption, investments, and remittances by millions of overseas Filipinos would “further buoy domestic demand during the remainder of the year," according to the country representative. “We do see robust recovery in the Philippines this year. Its growth prospects are quite solid," World Bank senior country economist Eric Le Borgne said. Private sector investments, trade flows, and economic confidence in East Asia and the Pacific are driving growth prospects that will likely average 8.9 percent this year or higher than the 7.3 percent the region recorded last year, the bank said. “The global recession has demonstrated improvements in the Philippines’ macro-financial resiliency, thanks to a remarkably robust external position. This is attributed to sound macro-fundamentals – especially the banking system, corporate sector, balance of payments and fiscal and monetary space – coupled with growing remittance flows," Le Borgne said. But growth in the second half should ease under 7.9 percent, according to Le Borgne, as the country’s fiscal and monetary authorities are now withdrawing the fiscal and monetary stimulus package put in place against the global financial crunch. Still, the incidence of poverty and hunger in the country remains high, he stressed. The bank said that high and growing income inequality, unequal sector and regional distribution of growth, and barriers to mobility across sectors and regions “structurally explains this trend." The El Niño weather phenomenon in 2009 and early this year as well as late 2009 tropical cyclones Ondoy and Pepeng that devastated the agriculture sector hampered the progress in tackling poverty, the bank said. Nevertheless, Hofman said the Philippines exited the global financial crisis — that the US Federal Reserve said officially started in December 2007 — under more favorable fiscal and monetary conditions. The Philippines now has stronger balance of payments surplus, higher gross international reserves, resilient remittance inflows, as well as a government committed to reducing its budget imbalance over the next three years, Hofman added. — VS, GMANews.TV