Philippines to exceed growth forecast for 2012 and 2013

The inflow of portfolio investments or “hot money” to the Philippines also surged to $1.01bn in November, the highest net inflow in about two years. This was also more than double the $490.35mn recorded in the same month last year.

Xinhua/Manila

The Philippine economy is expected to grow by no less than 7% this year, which is well above the country’s growth forecast of 5-6%, according to economic managers.

In his year-end economic briefing, Economic Planning Secretary Arsenio Balisacan said that the growth of country’s gross domestic product (GDP) would exceed its high-end target of 6%, adding that growth in 2013 would be between 5.5 to 6.5% and between 6.5 to 7.5% in 2014 and beyond.

Leading multilateral institutions, such as the World Bank and Standard & Poor’s (S&P), have also upgraded their growth forecast and credit rating for the Philippines respectively.

The World Bank has raised its growth forecast for the Philippines for this year and the next, crediting prudent economic policies of the administration of President Benigno Aquino coupled with political stability in the country.

For this year, the World Bank said that the Philippine economy would expand by 6%, becoming one of the fastest-growing economies in the Asia Pacific Region. It was the third time that the World Bank raised its forecast for Philippine economy growth of 2012.

The World Bank said that in 2013, the Philippines could grow by 6.2%.

The adjustments in the World Bank’s forecasts came after the government reported a surprising 7.1% growth rate in the third quarter, one of the fastest rates in the whole of Asia, next only to that of China.

The Philippine economy grew by 6.5% in the first three quarters of the year on the back of higher government spending, increased household consumption, and higher investments by local firms.  

In its “East Asia and Pacific Economic Update,” the multilateral agency claimed that the developing East Asia region would grow by 5.6% in 2012, from 4.4% in 2011.

“The rebound in Thailand following the floods in 2011, strong growth in the Philippines, and relatively mild slowdowns in Indonesia and Vietnam contributed to this recovery,” the World Bank said.  

S&P has upgraded its outlook on the credit rating of the Philippines from “stable” to “positive”, prompting Finance Secretary Cesar Purisima to express confidence that the country will finally get an investment grade in 2013.

An investment grade would mean more confidence on the Philippines to attract more foreign direct investments (FDIs) and thus help in jobs generation.

Two other economic indicators contributed in boosting the Philippine economy.

One, remittances from overseas Filipino workers reached a record high in October as global demand for Filipino workers remained strong despite the lingering crisis in the US and Europe.