RP economy to grow 4.2% in 2012 — WB

The World Bank (WB) reported that the Philippine economy is projected to grow by 4.2 percent this year mostly because of higher remittances from overseas Filipino workers and renewed public spending.

In its Global Economic Prospects 2012, the Washington-based lender said the continued strength of remittance inflows and renewed public spending is projected to boost the gross domestic product (GDP) of the Philippines to 4.2 percent this year.

GDP refers to the total value of final goods and services produced in the country.

For 2011, the World Bank projected that the Philippine economy is likely to grow by 3.7 percent.

In the first three quarters, the GDP grew by 3.6 percent, below the government’s target of between 5 to 6 percent.

The National Statistical Coordination Board will release the full-year GDP for 2011 on Jan. 30.

The bank also projected a 5 percent GDP growth for the country in 2013.

“The world economy has entered a very difficult phase characterized by significant downside risks and fragility,” the World Bank said.

“The financial turmoil generated by the intensification of the fiscal crisis in Europe has spread to both developing and high-income countries, and is generating significant headwinds,” the WB said.

The report added that exporters in the Philippines, Malaysia, Indonesia, Thailand and Vietnam are vulnerable to slowing import demand of Organization for Economic Co-operation and Development (OECD) economies.

For example, 48 percent of the Philippines’ exports are destined to three markets: Europe, 20 percent; the US, 18 percent and China, 10 percent.

Despite the increasingly cloudy global environment, the World Bank said that the growth in the East Asia and Pacific region is projected to slow by only 0.4 percentage points to 7.8 percent in 2012 and stabilizes at 7.8 percent for 2013.

“Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time,” Justin Yifu Lin, the WB’s chief economist and senior vice president for Development Economics said.

Developing countries have less fiscal and monetary space for remedial measures than they did in 2008/09. As a result, their ability to respond may be constrained if international finance dries up and global conditions deteriorate sharply.

To prepare for that possibility, Hans Timmer, director of Development Prospects at the WB, said: “Developing countries should pre-finance budget deficits, prioritize spending on social safety nets and infrastructure, and stress-test domestic banks. PNA