RP growth of 0.8%-1.8% this year feasible – World Bank

MANILA, Philippines – International lender World Bank (WB) is set to upgrade the country’s economic outlook and is now looking at a growth instead of a contraction after a strong recovery in the second quarter of the year.

WB country director Bert Hofman in an interview with reporters on the sidelines of the Philippine Business Conference (PBC) at the Manila Hotel said yesterday that the country has performed better than expected.

Hofman said that the WB is now looking at a gross domestic product (GDP) growth instead of a contraction of 0.5 percent this year from 3.8 percent last year.

“We are still reviewing the numbers but we think growth of between 0.8 and 1.8 percent, the government’s forecast, is feasible,” he told reporters who attended the conference sponsored by the Philippine Chamber of Commerce and Industry (PCCI).

He pointed out that the strong growth this year would be fuelled by robust remittances by overseas Filipino workers (OFWs) and the strong recovery of merchandise exports.

“Now people are bit more relaxed. The global economy looks better, the fiscal stimulus has kicked in so that gives some comfort to people to spend some of their money,” Hofman said.

The Bangko Sentral ng Pilipinas (BSP) now expects OFW remittances growing by at least four percent to a record $17.1 billion this year instead of a zero growth from $16.4 percent last year.

The amount of money sent home by Filipinos working abroad inched up by 3.7 percent to $11.34 billion in the first eight months of the year from $10.94 billion in the same period last year.

The Bangko Sentral ng Pilipinas (BSP), however, expects the country’s export earnings shrinking by 20 percent instead of 13 percent to 15 percent this year before growing by seven percent next year.

Latest data released by the National Statistics Office (NSO) showed that the value of country’s merchandise shipments plunged by 30.3 percent to $24 billion in January to August this year compared with $34.45 billion in the same period last year.

WB is the second multilateral lending institution to revise its GDP growth forecast for the Philippines after a stronger-than-expected expansion in the second quarter of the year.

Early this month, the International Monetary Fund revised its GDP growth forecast for RP to one percent instead of a projected contraction of one percent this year and an expansion of 3.2 percent instead of 2.25 percent next year.

The country’s domestic output expanded by a stronger-than-expected growth of 1.5 percent in the second quarter from a dismal growth of 0.6 percent in the first quarter bringing the first half GDP to one percent from four percent in the same period last year.

The Cabinet-level Development Budget Coordination Committee has scaled down the projected GDP growth this year to 0.8 percent to 1.8 percent from the original 3.1 percent to 4.1 percent. It sees the GDP expanding between 2.6 percent and 3.6 percent next year. –Lawrence Agcaoili (The Philippine Star)