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World Bank cuts Philippine growth forecast for 2011 to 3.7%

12-20-2011 15:48 BJT

MANILA, Dec. 20 (Xinhua) -- The World Bank reduced its growth forecast for the Philippines to 3.7 percent in 2011 owing to low public spending and weak global economy that hurts the country's exports.

The World Bank earlier put Philippine GDP growth for the year to 4.5 percent.

In its Philippine Quarterly Update issued Tuesday, the Washington-based lender said economic woes on the United States, Japan and Europe and the government underspending are the key " downside risks" to the country's growth prospects.

"The contraction in exports largely reflected weaker demand in advanced economies while public investments continued to shrink in part because of measures to improve accountability of public spending," the report said.

But the World Bank said despite a slower growth, the Philippines is "well-positioned to weather shocks" caused by global slowdown. This is due to remittances and capital inflows that will continue to support the country's external position.

The World Bank forecasts Philippine GDP to improve to 4.2 percent in 2012 thanks to export growth recovery, the government' s implementation of public-private partnership (PPP) projects, private sector investment, and increased public spending.

"Our projection hinges on the successful implementation of the government's disbursement acceleration program and an acceleration in private consumption and investment," said Karl Kendrick Chua, World Bank Country Economist.

Chua added the government needs to implement structural reforms -- like raising revenues to finance infrastructure, health, education and social protection, and simplifying business regulation to encourage entrepreneurship. This, he said, will allow the country to achieve sustained growth at rates above 5 percent in the years to come.

"A stronger structural underpinning would allow the country to deal with shocks more effectively, achieve more inclusive growth, and reduce poverty at a faster rate," he said.



Editor:Zhang Pengfei |Source: Xinhua

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