The World Bank has retained its 6.2 percent growth forecast for the Philippines this year but lowered its global growth projection to 2.2 percent.
In its latest Global Economic Prospects report, the bank said the country’s gross domestic product (GDP) may grow to 6.2 percent in 2013, before rising to 6.4 percent in the next two years.
The estimate is within the 6 percent to 7 percent growth target of the government.
In the report, the lender said the Philippines’ industrial activity, which relied less on domestic stimulus measures, continues to expand by a double-digit rate in early 2013.
It attributed the growth to the country’s strong trade linkages to a rebounding Japan.
“Suppliers of parts and components to Japan in regional production networks, particularly Thailand and the Philippines, could benefit from gains by Japanese exporters in global markets and even derive additional benefits through increased potential FDI [foreign direct investments]from Japan,” the World Bank said.
Based on data from the National Statistical Coordination Board, Japan is the country’s top source of approved FDI pledging.
Japan pledged about P17.4 billion, or 39.6 percent of the total foreign investment commitments in the Philippines.
For East Asia and the Pacific, the World Bank said that the region is projected to slow further to 7.3 percent in 2013, down from the 7.5 percent growth in 2012.
“The regional growth is projected to pick up to 7.5 percent in 2014 and 2015 as China’s growth firms up and growth in the region excluding China accelerates to 5.9 percent in 2014 and then 6 percent in 2015 supported by strengthening global trade flows,” it added.
The lender said the main risks to the region are internal, associated with a sharp reduction in Chinese investment, quantitative easing in Japan and rapidly rising debt and asset prices pose risks for Indonesia, Malaysia, Thailand and the Philippines.
“Efforts to enhance productivity gains through market reforms should deepen, especially in Cambodia, the Lao PDR, Myanmar, and Vietnam, while building buffers against future shocks remains a policy priority in Lao PDR, and small Pacific islands,” it said.
The World Bank also lowered its growth estimate for the global economy in 2013, but said that expansion appeared better balanced than just before the 2008 financial crisis.
The global economy was expected to grow at an annual rate of 2.2 percent this year, led by a 5.1 percent surge in developing countries, down from a January estimate of a 2.4 percent.
“The overall acceleration is not stronger because the majority of developing countries have more-or-less fully recovered from the 2008 financial crisis,” the report said.
Kaushik Basu, the World Bank’s chief economist, said the estimates are “actually somewhat similar to what we were saying about six months ago.”
“In a turbulent global economy, that is good news, when you have two periods without any big shifts and changes,” he told a news conference.
Growth in high-income countries was notably dampened by the recession-mired eurozone. Unsurprisingly, the sharpest downward revision was for the 17-nation bloc, where a contraction of 0.6 percent was seen, down from the prior estimate of a 0.1 percent dip.
Collateral damage from the eurozone crisis continued to be felt in the Middle East and North Africa region, one of the eurozone’s most important trade partners.
“We’re moving towards a less volatile period where growth is going to be slower but less subject to strong fluctuations, especially those coming from the high-income world that we’ve observed in the previous years,” said Andrew Burns, co-author of the report.
Burns noted the robust growth in the pre-crisis period was due to the financial “bubble” and that now growth was more in line with the underlying capacity in developing countries.
“This is a case of moving towards the new normal of the post-crisis,” he said.
With a report from AFP