World Bank trims Philippines growth forecast

Philippine economic growth would likely ease this year, but stronger government finances should help the impoverished Asian nation avoid the worst of pared figures, the World Bank said on Thursday. Amid a dire outlook for many key trading partners, World Bank economist Yi Soonwha trimmed its growth forecast for the country to 4.5 percent this year and 5.0 percent next year, from 5.0 and 5.4 percent previously. "Private consumption is expected to grow steadily, buoyed by lower unemployment, higher government spending and sustained remittances," she said, citing cash transfers by about nine million Filipinos who live abroad. "With ample fiscal space, the government is expected to boost spending in the second half and catch up on delayed implementation of infrastructure projects." The Philippine economy had grown by a lower-than-expected 4.0 percent in the first half, putting the government's full-year target of 7-8 percent in peril. Yi, head of a team that wrote an updated country report for the Philippines, said the services and industry sectors should drive growth this year as businesses are buoyed by the rollout of infrastructure projects. The government had planned to launch a dozen toll road, airport and railway projects this year, to be funded mostly by the private sector, but it has since moved tenders to the end of the year after putting some projects under review. World Bank economist Ulrich Lachler said relative political stability and stronger finances would help the 15-month-old government of President Benigno Aquino. While capital inflows are expected to continue, foreign direct investment are likely to moderate as foreign investors have become more cautious in light of recent financial turmoil, he said.