World Bank keeps PHL growth forecast at 5%

The Philippine gross domestic product will grow by 5 percent this year and 5.4 percent next year, the World Bank said Wednesday, keeping its earlier forecast for the Southeast Asian nation’s P850-trillion economy. The Washington-based multilateral lender’s figures are lower than the Philippine government’s 7-percent to 8-percent target range from 2011 to 2016. However, the World Bank said in its Philippine Quarterly Update that the economy may grow better as the strong focus and early gains of the Aquino administration in tackling corruption and improving the investment climate could boost domestic investment. The challenge now is sustaining the momentum of reforms to achieve inclusive or broad-based growth that benefits the poor, the bank said. "While business confidence has dampened in light of various external shocks that took place in early 2011 — the MENA and Japan events, rising commodity prices — domestic investment represents an important upside potential given the strong focus and early gains of the Aquino administration in tackling corruption and improving the investment climate," according to the World Bank report said. End of trade disruptions Prospects for the supply side remain favorable with manufacturing and construction projected to benefit from the end of the trade disruptions linked to Japan’s post-disaster reconstruction, as well as the solid growth forecast for the business process outsourcing, World Bank senior economist Eric Le Borgne said. "Increasing mineral prices will provide incentive to fast track investment and increase production in the mining sector. The strong performance of the services sector in the first quarter is expected to remain robust throughout the year. The agriculture sector is projected to continue being a net contributor to growth," Le Borgne added. The Philippines’ recent performance indicates that the country’s economy has already stabilized since the global financial crisis, with more robust and less variable growth, Bert Hofman, World Bank country director, said. "Prior to the global recession that started in 2008, the country was perceived to have a weak fiscal position, making it vulnerable to shocks and volatility. The global recession showed the extent to which the country’s economic fundamentals have improved, Hofman said. — VS, GMA News