BY A. M. G. ROA, Reporter
Improved 2010 growth forecasts issued by ADB
THE ASIAN Development Bank (ADB) has raised its 2010 growth forecast for the Philippines, expecting the economy to grow by 6.2% on the back of a trade and investment rebound and private consumption growth.
The projection, contained in the bank’s Asian Development Outlook (ADO) 2010 Update released yesterday, is an upward revision of its 5% forecast in July and the 3.8% in April.
It is consistent with the government’s 5-6% target, a socioeconomic planning official said.
"Higher than expected economic growth in the first half of 2010 was driven by strong domestic investment and industrial output, helped by external demand. Consumption [both private and government] continued to expand," the report said.
First half growth was a substantially higher 7.9% compared to the 0.9% a year earlier at the height of the global financial crisis.
Private consumption grew by 5.1%, supported by remittances from overseas workers. Fixed investment rose to 17.2%, the highest level in seven years, the report added.
Exports were also noted to have risen by nearly 40% in the first half while imports increased almost 30%.
The ADB expects the Philippines to grow by 4.5% in the second half and by 4.6% in 2011 -- unchanged from the April ADO projection.
"Reduced policy stimulus at home and abroad, slower growth in world trade and higher 2010 numbers are likely to temper the growth momentum in 2011," said Neeraj Jain, ADB country director, in a statement.
University of Asia and the Pacific economist Victor A. Abola noted that the bank was the last to revise projections upwards after the International Monetary Fund (6% from 3.6%) and the World Bank (4.4% from 3.5%).
"My own forecast is 6.7%. Yes, there will be a moderation in the second half, but it will still remain robust. The growth drivers are exports especially to East Asia...," Mr. Abola said.
Other drivers will be private construction, business process outsourcing, and positive agriculture growth.
"The same factors will affect 2011 growth, with the addition of more investments (both local and foreign) since the PPP (public-private partnership) plan will be out only by November 2010," Mr. Abola added.
Inflation is expected to average 4.5% for 2010, lower than the forecast in April. Inflation for next year will likely be 4.4%.
The ADB identified tax administration and business climate improvements as the main challenges to safeguarding fiscal sustainability.
Risks to the 2010-2011 forecasts include uncertainty over the global economic recovery and damage to agriculture from the La Niña weather pattern.
The ADO also raised the 2010 growth forecast for developing Asia to 8.2% from 7.5%, well above last year’s 5.4%. Growth for Southeast Asia was also raised to 7.4% from 5.1% in April.
The economic outlook for countries in the subregion are: Brunei Darussalam, 1.1%; Cambodia, 5%; Indonesia, 6.1%; Lao People’s Democratic Republic, 7.4%; Malaysia, 6.8%; Myanmar, 5%; Singapore, 14%; Thailand, 7%; and Vietnam, 6.7%.