Washington-based lender World Bank trimmed down its economic growth forecast for the Philippines for this year and 2014, still on the account of the damages brought by Super Typhoon Yolanda.
In a statement over the weekend, Rogier van den Brink, lead economist for the World Bank in the Philippines said that it’s likely that the country’s gross domestic product (GDP) growth rate will be 6.9 percent in 2013 from the lender’s pre-Yolanda forecast of 7 percent.
For 2014, the Bank said that growth could further slow down to 6.5 percent from the earlier estimate of 6.7 percent.
The latest World Bank growth forecasts are still within the government’s 6-percent to 7-percent, and 6.5-percent to 7.5 percent target this year and for 2014, respectively.
Meanwhile, as part of a broader and longer-term assistance package, the World Bank Group’s Board of Executive Directors approved the $500 million quick-disbursing budget support that the government can use in dealing with the short-term recovery and reconstruction efforts.
“The World Bank support will be guided by the human face of this tragedy. This obliges us to act quickly and work with all involved parties toward a quick implementation of the recovery and reconstruction measures so that children can go back to school, people have access to health services, and businesses can return to normal and resume creating jobs and incomes,” said Axel van Trotsenburg, World Bank vice president for the East Asia and Pacific.
Recovery in 2014
Meanwhile, global banking giant Citi is seeing a recovery of the Philippine economy in 2014 because of the reconstruction efforts in the aftermath of the super typhoon.
In its latest research titled “Pan-Asia Road Ahead: 2014 Outlook,” the banking giant said that the country’s GDP could grow by 7.3 percent, or near the upper end of the government’s target for next year.
“The devastation wrought by Typhoon Yolanda may slow 4Q13 [fourth quarter of 2013]GDP growth, but the rebuilding efforts could prompt a sharp recovery in 1Q14 [first quarter of 2014],” it stated.
It cited the country’s current account surplus and inflation rate as drivers of growth, stating that “the current account remains in surplus. Inflation should stay within an acceptable range of 4 percent to 5 percent.”
Latest data form the Bangko Sentral ng Pilipinas (BSP) showed that the country’s current account recorded a surplus of $2.5 billion in the second quarter, or equivalent to 3.6 percent of the GDP. Robust current account surplus supported the balance of payments (BOP) to reach a $1-billion surplus in the same quarter.
Inflation, on the other hand, averaged to 2.8 percent for the first 11 months of the year and still within the BSP’s 3-percent to 5-percent target band of the year.
Besides reconstruction theme, Citi said that deployment of excess liquidity and gradually rising rates are seen as the key drivers of the market.