WB keeps 2013 PHL growth outlook at 6.2%

The World Bank on Monday said it kept its 2013 growth forecast for the Philippines, but lowered its projection for East Asia and Pacific as a whole. The multilateral lender cited government efforts to improve fiscal space. The Philippines is “gradually rebuilding the tax base through administrative reforms, which increased from 12.3 percent of GDP in 2011 to 12.9 percent last year,” it said in a report. The recent passage of the the “sin” tax reform measure hiking excise taxes on alcohol and tobacco “will further strengthen revenues and increase the country’s fiscal space in case of need,” it added. In its latest East Asia and the Pacific Economic Update, Washington-based World Bank said the Philippines' gross domestic product (GDP) will settle at 6.2 percent this year before accelerating to 6.4 percent next year. The projections are within the government's 6 percent to 7 percent goal for the year, and is above the Asian Development Bank's 6 percent forecast for 2013. The government targets 6.5 percent to 7.5 percent growth next year. Philippine output hit 6.6 percent last year—the fastest in Southeast Asia—despite a bleak global economic backdrop. The World Bank report is a welcome development, according to an economist at Bank of the Philippine Islands. “The World Bank retaining their rather optimistic projection for the Philippines is a good sign, for they have always been on the conservative side,” Emilio Neri Jr. told GMA News Online. “It just shows that they remain confident on the growth trajectory of the country,” said the economist. The country, however,  could achieve faster growth if the government manages to break ground on key infrastructure projects while tempering the appreciating peso. Missing fiscal spark “The most critical would be government outlays after elections. In particular, faster results and groundbreaking of PPP (public-private partnership) projects,” Neri noted. “In the Philippines, catching up on government infrastructure spending will provide the fiscal spark that is still missing in the country’s growth path, although infrastructure spending is gearing up recently,” according to the World Bank. So far, only two PPPs have been awarded since the flagship infrastructure program was unveiled – with much fanfare – in November 2010. “The other thing is to control the appreciation of the peso in order to cushion effects on sectors that earn in dollars—exporters, BPOs (business process outsourcing sector) and families of OFWs (overseas Filipino workers),” Neri said. The peso has been trading between P40 to P41 per dollar level, stronger than the P42 per dollar level in same month last year.   World Bank East Asia and Pacific Chief Economist Bert Hofman also warned in a statement that “strong rebound in capital inflows to the region induced by protracted rounds of quantitative easing in the US, EU and Japan, may amplify credit and asset price risks,” including stock market and housing sector asset bubbles in the Philippines. For the East Asia and the Pacific region, the World Bank sees growth at 7.8 percent in 2013, and a  down to 7.6 percent in 2014. Projections for the Southeast Asian region are 5.4 percent this year and 5.7 percent in 2014. The lender also sees Cambodia growing by 7 percent this year, Indonesia by 6.2 percent, Laos by 7.6 percent, Malaysia by 5.1 percent, Myanmar by 6.5 percent, Thailand by 5.3 percent and Vietnam by 5.2 percent. The World Bank projects global growth at 2.4 percent in 2013,  and at 3.1 percent in 2014. — VS, GMA News