MANILA, Philippines – The World Bank downgrades anew its forecast for Philippine economic growth to 3.7% this 2011, lower than the government’s target.
In its Philippine Quarterly Update (PQU) released on Tuesday, Dec. 20, the Washington-based lender cut its growth forecast for the Philippines from 4.5%. Early in the year, World Bank said the country would grow at 5%.
The Philippine government is aiming to grow at 4.5% to 5.5% this 2011 even if the annual growth in the third quarter was a dismal 3.2%, lower than the market forecast of 4.3%.
World bank country economist Karl Kendrick Chua cited the weak global demand and low public spending in the first three quarters of the year, reasons that the economic managers of the country have acknowledged before.
“Our projection hings on the successful implementation of the government’s disbursement acceleration program and an acceleration in private consumption and investment,” Chua said in a statement.
Public-private partnerships on big ticket infrastructure projects, which the Aquino government said would boost spending and fuel economic growth this year, were delayed as officials peruse over the projects.
The economy of major trade partners and development assistance sources took a hit in 2011. Japan fell into recession in 2011 after the earthquake and tsunami in March. United States’ growth was sluggish amid deficit concerns and budget cuts. The Eurozone’s output weakened sharply after a crippling debt and economic crises.
World Bank noted that the strong remittances from overseas Filipino workers have insulated the country from external shocks.
The bank said the Philippines still need structural reforms to reach growth levels of above 5%.
“The government is instituting important measures to improve transparency and accountability in public spending. Once these institutional reforms are in place, spending is expected to fully recover at cost-effective levels with more resolute impact on the country’s growth and development,” Chua said.
World Bank also trimmed its forecast for the Philippines’ 2012 economic growth to 4.8%.
This is lower than its earlier GDP growth forecast of 5.4% for next year.
The government is keeping its own goal of 5% for 2012. – Rappler.com