...the positive forecast

ADB raises PH growth forecast to 5%

 

abs-cbnNEWS.com

Posted at 04/06/2011

MANILA, Philippines (UPDATE) - The Asian Development Bank has upgraded its growth forecast for the Philippines this year, mainly on expectations of sustained investment inflows and private consumption.

In its annual Asian Development Outlook released Tuesday, the Manila-based multilateral lender said Philippine gross domestic product (GDP) may grow 5% in 2011, higher than the 4.6% projection it gave in September last year.

This is in line with the projections of most economists. On the contrary, the government is still projecting a 7% to 8% growth.

ADB said key to growth are the Aquino administration's efforts to improve governance and its fiscal position, and the progress in the Public-Private Partnership (PPP) program—all of which would boost business confidence.

"The forecast is for solid economic growth this year and next, and sustained increases in investment now appear achievable, provided that the government pushes through with policy and governance reforms," it said.
Next year, the local economy is seen to expand by 5.3%.

ADB-Forecast	Philippine Growth
2011	5% (raised from 4.6%)
2012	5.30%

ADB said its forecasts assumed that the political turmoil in the Middle East and North Africa, as well as the disasters in Japan, do not affect the inflow of remittances from overseas Filipino workers. Remittances, which drive consumption, grew 8.2% to $18.8 billion in 2010.

Export growth is expected to pull back from last year's levels to about 11% this year, ADB said. It noted the twin Japan earthquake and tsunami disasters could dent exports as the main electronics and semiconductors industries "depend heavily on components from Japan."

Government spending, meanwhile, would be less stimulative to the economy this year, but the private sector is expected to pick up the slack with its participation in major infrastructure projects.
Five projects that include expressways and privatization of railways would be up for bidding by mid-year under the PPP program.

Inflation

Inflation is seen to average 4.9% in 2011, at the high-end of the government's official target range of 3% to 5%.

"This projection reflects, besides higher prices for imported oil, hikes for utility charges and public transport fares. Higher global food prices will also put upward pressure on inflation."

ADB warned that higher-than-forecast increases in global food and oil prices as well as weaker global recovery might affect growth.

Developing Asia

ADB forecasts for 2011	as of 4/2011	as of 9/2010
Asia	7.8%	7.3%
Southeast Asia	5.5%	5.4%
China	9.6%	9.1%

The bank raised its growth forecast for all of developing Asia to 7.8% from 7.3%. The forecast does not include Japan.

ADB said the disasters in Japan could have "substantial" effect on its growth in the near term but long-term effects will be limited. It predicted Japan's economy will grow 1.5% this year, about the same as it projected in September.

The forecast for Southeast Asia, where the Philippines belongs, was hiked to 5.5% from 5.4%. - With a report from Coco Alcuaz, ANC