Philippine economy to grow 5% this year: World Bank

10:26, July 07, 2011      

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The World Bank forecasts that Philippine economy will expand five percent this year, backed by increased investments, rising domestic consumption and stronger services sector.

In its Philippines Quarterly Update (PQU) released Wednesday by its office in Manila, the Washington-based lender said "growth could potentially be higher as the strong focus and early gains of President Aquino's administration in tackling corruption and improving the investment climate could boost domestic investment."

Philippine exports are expected to rise on back of recovery in Japan, one of its top export markets. The rising outsourcing industry is also boosting employment levels and will support the country's consumption-based growth.

"Prospects on the supply side remain favorable with manufacturing and construction projected to benefit from the end of the trade disruption linked to Japan's post-disaster reconstruction, as well as the solid growth forecast for the business process outsourcing," said World Bank Senior Economist Eric Le Borgne.

The challenge, however, is for the Philippines to pursue a more inclusive development that will allow it to slash its 30 percent poverty incidence level.

The World Bank said the Philippine government needs to enhance the income-earning opportunities for the poor as well. The government also needs to put more resources to education, health, and social protection services.

The World Bank added regional airport development combined with partial "open sky" agreements would enable international travelers to reach tourism hot spots in the Philippines directly, thus generating jobs for the poor as well as business opportunities from micro and small enterprises.

The World Bank's forecast is lower than the Philippine government's seven to eight percent growth target for 2011.

But according to Benjamin Diokno, economics professor at the University of the Philippines, the country's economic managers need to downscale the country's growth targets to around five to six percent.

For the second quarter alone, Diokno expects the Philippine economy to slow to 4.9 percent. This is because the brunt of the impact of the triple tragedy in Japan and the conflicts in the Middle East and North Africa will be reflected in the April to June period.

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