ADB lowers Philippine growth forecast

THE Asian Development Bank on Tuesday cut its growth forecast for the Philippines’ gross domestic product to 3.7 percent this year from 4.7 percent earlier as a result of the global economic downturn.

The bank also lowered its growth outlook for the Philippines to 4.8 percent in 2012 from its previous estimate of 5.1 percent, but that could fall further to 4.2 percent if Europe’s debt woes worsened and the United States’ economic problems deepened, it said.

Still, the bank expects the money sent home by the Filipinos working abroad to continue supporting the economy.

“Robust domestic demand from strong remittance inflows will likely sustain growth in the Philippines at 3.7 percent this year and 4.8 percent in 2012,” the bank said in its study, Asia Economic Monitor.

Economic growth in the Philippines slowed to 3.2 percent in the third quarter, pulling down the average growth for the first three quarters to 3.6 percent or below the government’s already lowered target range of 4.5 to 5.5 percent. In 2010 the economy grew by 7.6 percent.

The ADB said economic growth in emerging East Asia would continue to moderate next year as the growing sovereign debt problems in Europe and the United States’ weak economy raised the specter of a deep global economic downturn.

The bank expects Southeast Asia to grow by 4.8 percent as a group this year, slower than its previous forecast of 5.4 percent. It expects Indonesia to expand by 6.6 percent, Malaysia by 4.8 percent, Thailand by 2.0 percent, and Vietnam by 5.8 percent.

The bank warned that the impact on emerging East Asia would be serious but manageable in the event the United States and European economies contracted sharply.

“The turmoil emanating from Europe poses a growing danger to trade and finance within emerging East Asia…” said Iwan Azis, head of the bank’s Office of Regional Economic Integration that produced the report.

“The region’s policymakers must be prepared to act promptly, decisively, and collectively to counter what could be an extended global economic slowdown.”

The bank cut its growth forecast for emerging Asia to 7.2 percent next year from 7.5 percent in September, although it retained its growth forecast of 7.5 percent for that region this year. –Roderick T. dela Cruz, Manila Standard Today