By Bettina Faye V. Roc, Reporter

UNESCAP revises growth projection upwards

Posted on December 20, 2013

BACKED by strong fundamentals, the Philippine economy is projected to grow by 7% this year, with expansion seen to remain robust in 2014 as the country embarks on its recovery plan following super typhoon Yolanda (international name: Haiyan), according to the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).

In its year-end update to its Economic and Social Survey 2013, UNESCAP said gross domestic product (GDP) growth this year could reach 7%, the high end of the government’s 6-7% goal and faster than the UN body’s 6.2% forecast in its September report.

The economy grew by 7.4% in the nine months ending September.

"The Philippines is projected to grow by 6.7% in 2014 and could see further acceleration due to reconstruction activities in the aftermath of Typhoon Haiyan," the report added.

The government is targeting a GDP growth rate of 6.5-7.5% next year.

"Furthermore, remittances will continue to serve as a stable source of support for the Philippine economy given the better outlook for receiving countries as well as the general lack of short-term volatility in remittance flows," UNESCAP said.

According to the institution’s estimates, at 7%, the Philippines’ economic expansion this year will be one of the fastest among developing Asia-Pacific countries -- next only to China, which the UN body expects to grow by 7.5%.

The same is true with its 2014 forecasts, with the Philippines seen to grow by 6.7% and China, by 7.3%.

This robust pace, however, is not expected to stoke inflation. UNESCAP said it sees the annual rise in consumer prices in the Philippines averaging at just 3% this year and 3.9% in 2014 -- both well within the central bank’s 3-5% target range for 2013-2014.

Inflation soared to a nine-month high of 3.3% last month because of higher food prices, taking the 11-month tally to 2.8%, which remains below the central bank’s goal.

UNESCAP’s growth forecasts for the Philippines are likewise well above its projections for developing Asia and the Pacific, which it set at 5.2% for this year -- slower than its previous 6% estimate -- and 5.6% in 2014. The region’s growth averaged at 5.6% last year.

The institution said that growth in the region will remain subpar next year, affected by "slow recovery, policy uncertainty and protectionism in developed countries, as well as structural impediments, such as growing inequality."

"The three years between 2012 and 2014 mark the first time in at least two decades that developing Asia-Pacific economies are growing at less then 6% annually," it noted.

In a statement attached to the report, UNESCAP Executive Secretary Noeleen Heyzer said: "The economies of Asia and the Pacific are at a turning point. The manner in which the current transition is managed will have a long-term impact on the region’s inclusive and sustainable development path."

A challenge for economies in the region next year would be to develop policies that would support growth amid the recovery in the global economic environment, UNESCAP said.

"Improved access to decent and productive employment is key to reducing rising economic and social inequality, which is a major constraint to realizing the full economic potential of the region," it added.

The vulnerability of the region to natural disasters would likewise entail governments in the region to address any structural impediments to growth, UNESCAP noted.