World Bank raises Philippines growth forecast

19 July 2012
A slum area is backdropped with the Manila skyline
A slum area is backdropped with the Manila skyline in 2007. The World Bank raised its 2012 growth forecast for the Philippines Thursday following a stronger-than-expected start to the year, but warned of headwinds from the crisis in Europe and a Chinese slowdown

The World Bank raised its 2012 growth forecast for the Philippines Thursday following a stronger-than-expected start to the year, but warned of headwinds from the crisis in Europe and a Chinese slowdown.

However, it said the momentum comes amid weakening global economic growth that would affect key export markets and cause job losses in electronics and other manufacturing industries.

The economy grew 6.4 percent in the three months to March, after an anaemic 3.9 percent expansion for 2011.

"We have revised our growth forecast upward to 4.6 percent from 4.2 percent for 2012, reflecting higher growth in the first quarter," the bank said in a quarterly country report.

"However, this projection does not yet factor in a possible intensification of the crisis in Europe and a further slowdown in China."

It said domestic demand would be boosted by higher government spending and robust private consumption backed by remittances by a huge Filipino overseas work force.

The bank expects global growth to soften to 2.5 percent this year from 2.7 percent in 2011, hitting key Philippine export markets the United States, the eurozone, Japan and China.