SUMMARY
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MANILA, Philippines – The Philippine economy is expected to post growth above 6% until 2016, according to the World Bank.
In its 2014 Global Economic Prospects report, the multilateral agency said the Philippines will grow 6.5% in 2016, when the Aquino administration ends its term. Growth is seen hitting 7.1% in 2015, 6.5% in 2014 and 6.9% in 2013.
The World Bank noted that consumption, supported by sustained remittance inflows, will remain as the key driver of the economy. Reconstruction and rehabilitation efforts will also help spur growth, offsetting the impact of widespread damage caused by Typhoon Yolanda (Haiyan).
“In the Philippines, Typhoon Haiyan had a large humanitarian impact and has cut deeply into activity in the central islands, but its impact on the country’s overall economic growth is likely to be limited, and growth is estimated to be 6.9% in 2013.”
The World Bank earlier reduced its 2013 and 2014 growth forecasts for the country to 6.9% and 6.5%, respectively, in the aftermath of the typhoon.
“There is increasing need to undertake structural reforms and rebalance the economy from its excessive dependence on consumption while at the same time prioritizing investment, to rebuild the typhoon–stricken portions of the economy… remittances expanded by an estimated 5.8% in 2013 and will likely accelerate in the wake of typhoon,” the World Bank noted.
Philippine gross domestic product (GDP) grew 7% in the third quarter of 2013, after posting a 7.65% growth in the first half, much higher than the government’s full-year target of 6% to 7%.
The government has set a GDP target of 6.5% to 7.5% for 2014.
Yolanda struck Visayas in November, killing thousands of people and destroying the homes of hundreds of thousands of families.
The government allotted P360.9 billion ($8.17 billion) for reconstruction and rehabilitation efforts in affected areas.
Rehab to drive regional growth
The rebuilding of Yolanda-ravaged communities will also boost growth of East Asia and the Pacific.
“Regional output growth is estimated to settle around 5.5% by 2016 as external demand solidifies and adjustment comes to completion. A temporary acceleration of regional growth (excluding China) in 2015 to 5.7% partly reflects reconstruction efforts in the Philippines,” the World Bank said.
Global growth prospects
Global GDP is seen to grow by 2.4% and 3.4% in 2013 and 2014. It is expected to accelerate further to 3.4% in 2015 and 3.5% in 2016.
World Bank President Jim Yong Kim noted that the growth momentum in advanced economies will support the growth of developing economies.
“The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead. Still, to accelerate poverty reduction, developing nations will need to adopt structural reforms that promote job creation, strengthen financial systems, and shore up social safety nets,” he explained.
Advanced economies will grow by 1.3% and 2.2% in 2013 and 2014, and will stabilize at 2.4% in 2015 and 2016.
Economic growth of developing countries, on the other hand, is projected to be 4.8% in 2013, 5.3% in 2014, 5.5% in 2015, and 5.7% in 2016. – Rappler.com
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