Philippine economy to lag most of its neighbors next year – ADB

THE Asian Development Bank (ADB) has upgraded its economic growth forecast for the Philippines this year, but warned of a slowdown next year because of weaker external demand.

In its latest Asia Economic Monitor (AEM), the Manila-based lender projected that the Philippine economy, as measured by the country’s gross domestic product (GDP), would grow by 6.8 percent this year, higher than the ADB’s September forecast of 6.2 percent.

An indicator of economic performance, GDP measures the amount of final goods and services produced in a country.
The National Statistical Coordination Board earlier reported that the economy expanded by 7.5 percent in the first nine months from 0.7 percent in the same period last year.

The Philippine government expects GDP to grow between 5 percent and 6 percent this year.

In 2011, economic growth would decelerate to 4.6 percent “due to weaker external demand and the need for fiscal consolidation,” the ADB said.

The lender’s projection for next year was lower than the government’s target range of 7 percent to 8 percent.

The ADB noted that the weaker outlook for the global economy coupled with the phasing out of fiscal and monetary stimulus within the region means economic growth should moderate next year.

Average growth in emerging East Asia is likely to be 7.3 percent in 2011 after growing a likely 8.8 percent in 2010.

The ADB projected that GDP growth in Indonesia would hit 6.3 percent next year; Malaysia, 5 percent; Thailand, 4.5 percent; Vietnam, 7 percent; Cambodia, 6 percent; Lao PDR, 7.5 percent; and Myanmar, 5.3 percent.

Iwan Azis, head of ADB’s Office of Regional Economic Integration, said the V-shaped recovery has run its course in emerging East Asia and the challenge for the region is to put in place national policies that will translate swift recovery into long-term growth.

The ADB report added that risks to the outlook for the region are also higher than they were six months ago.

“Policy challenges stem from the relatively weak recovery in advanced economies, potentially destabilizing capital inflows, inflation and asset price bubbles in some countries, and protectionism,” the lender said. –Darwin G Amojelar, Senior Reporter, Manila Times