World Bank ups Philippine growth forecasts amid East Asia slow down
Washington-based World Bank on Monday raise its Philippine economic growth forecast for this year and the next, citing strong private and public consumption, in the face of an expected slowdown for the rest of developing East Asia.
In a video conference with developing East Asia-based journalists, World Bank East Asia and Pacific chief economist in Singapore Bert Hofman said forecasts for the whole region was "a bit down" as global demand remains tepid.
For developing countries in East Asia and the Pacific as a whole, gross domestic product (GDP) growth is seen at 7.1 percent from 7.8 percent in 2013 and 7.2 percent from 7.6 percent in 2014, according to the multilateral lender's East Asia and the Pacific Economic Update.
The lender, however, raised the Philippine GDP growth forecast to 7 percent from 6.2 percent this year and 6.7 percent from 6.4 percent in 2014.
The bank said the Philippines will grow by 6.8 percent in 2015.
"Most of the world's demand was slower than expected," said Hofman.
In the report, World Bank said the strong 7.6-percent Philippine GDP growth in the first half was "underpinned by consumption and services, with investment and manufacturing giving an extra boost."
Hofman noted Philippine consumer demand will stay strong and government spending likely to increase as the administration tries to address infrastructure bottlenecks.
According to the bank, the Philippine government needs to increase revenues so it can bankroll education, healthcare and infrastructure development as a way of making growth felt at the grassroots.
"Philippines needs more revenues in order to have a sustainable financing of government's inclusive growth agenda and infrastructure development," said Hofman.
In a briefing in Manila after the video conference, World Bank lead economist for the Philippines Rogier van den Brink said the approval of a fiscal incentives bill – a measure rationalizing tax perks of businesses – as well as moves toward improving the ease of doing business and abolishing anti-competitive measures will help "lock-in the growth path that the country seems to be embarking on."
He said the government tax perks should be given to "sectors that are labor intensive" because high unemployment has belied the country's strong growth.
Van den Brink, however, said reforms should only come from the government. "The policy reform agenda to create more and better jobs is wide ranging, which is why it will need a broad coalition support."
He maintained the Philippine economy will continue to enjoy strong fundamentals amid low and stable inflation in the next two to three years. Inflation settled at 2.8 percent in the nine months to September.
Japan companies looks to invest in Philippine outsourcing industry, says IBPAP
Japanese companies want to get a piece of the action in information technology and business process management by investing in the Philippine outsourcing industry, an official told reporters in a press conference Monday.
Five Japanese companies are dead serious about this, according to the Information Technology and Business Processing Association of the Philippines (IBPAP).
"There were at least five Japanese companies that visited the Philippines earlier to do due diligence, to determine if they will invest here or outsource," said IBPAP president Jose Mari Mercado.
On the Philippine side, Mercado noted 14 IT companies attended a forum in Japan organized by the Philippine embassy in Roppongi, Tokyo to promote the IT competency of Filipinos. There were around 150 Japanese businessmen at the forum.
"Our key message there on our IT competency is that we have the people and resources," Mercado said. "Japan is running out of these resources," he added.
Other Japanese companies were interested in animation, contact centers, and IT programming. Right now, 20 Japanese firms are outsourcing part of their business processes in the Philippines.
Mercado said Fujitsu is one of the companies with IT support operations in the Philippines, noting most of the Japanese companies with outsourced business process operations are in finance, accounting services and IT support. – VS, GMA News
