World Bank downgrades Philippine growth forecasts for 2011, 2012

The World Bank on Thursday downgraded the 2011 and 2012 growth forecasts for the Philippines amid weakness in the global economy, dpa reported. The bank said in a quarterly report that it expected the Philippine economy to grow by 4.5 per cent in 2011 and 5 per cent in 2012, down from its earlier forecast of 5 per cent and 5.4 per cent, respectively. The report noted that the Philippine economy grew 3.4 per cent in the second quarter, below the government target of 4.5 to 5.5 per cent. It said public construction spending contracted by 51.2 per cent in the second quarter while exports continued to decline because of weaknesses in the economies of the Philippines' main trading partners the United States, Japan and Europe. "The challenge for policymakers is to ensure that the Philippines continues to improve its competitiveness while cushioning the economy from adverse external shocks," the report said. "To strengthen the country's resiliency to external shocks, the government needs to accelerate public spending," it said. "Raising more revenues through improved tax administration and reforms will enable the government to meet its priority spending targets, especially in infrastructure and human capital investment." It projected domestic investment to expand to 21.8 per cent of gross domestic product in 2011 from 20.5 per cent in 2010 and further improve to 23.1 per cent in 2012 "as the government accelerates the pace of capital outlays and as business sentiment turns more positive."