Top Story

ADB to hike forecasts

Posted on December 10, 2012

GROWTH ESTIMATES for the Philippines will be revised by the Asian Development Bank (ADB) following last month’s announcement of surprisingly strong third- quarter results.

"Definitely, [the ADB’s] 2012 forecast for the Philippines will be revised ... it will be slightly higher than 5.5%," said Norio Usui, the Manila-based lender’s senior economist for the Philippines.

The 2013 outlook for the country will also be raised to "slightly higher than 5%," Mr. Usui told BusinessWorld last Friday, with final forecasts likely to be announced early next year.

The ADB in October revised its 2012 estimate to 5.5% from the 4.8% announced in April, while the 2013 figure was kept at 5%.

Data released last month put third quarter growth at 7.1%, beating expectations of a slowdown and raising the year-to-date average to 6.5% -- exceeding the official 5-6% target.

Economic managers have said that 2012 growth could now hit 6-7% -- the goal for the following year -- and a number of analysts have over the past week revised their estimates upward.

Mr. Usui noted that private consumption and public spending had contributed to the strong growth.

"The government did not spend a lot in the last two years and it is not a mistake of President [Benigno S. C.] Aquino [III] as the government wanted to improve a no-corruption policy. The government has not spent all [it should have] this year, but spending level has increased," he said.

Slow public spending was blamed for 2011’s meager 3.9% growth. Government officials blamed disbursement delays on the need to implement procurement reforms.

Mr. Usui, however, said this year’s turnaround will not make a real dent unless the government delivers on its promise to provide more jobs -- "the missing link between development and growth".

"Despite high growth, why can’t normal Filipinos find jobs?" he asked.

Remittances from migrant Filipinos may have helped boost consumption but Mr. Usui claimed there was "something fundamentally wrong with an economy when 10% of its population must leave the country for employment."

The government, he said, should take advantage of increased investor interest, which has been boosted in part by a Moody’s upgrade.

Moody’s Investors Service in October upgraded the country’s credit score to Ba1, one notch below investment grade. This aligned the debt watcher’s score with the BB+ rating assigned by both Fitch Ratings and Standard & Poor’s Ratings Services.

Mr. Usui noted that the lack of infrastructure and a poor investment climate -- the latter partly due to very tight foreign ownership regulation -- remained investment bottlenecks, but he added that the government had done a "great job" in improving governance.

"There are so many good signs that investors now are realizing, inspite all the problems, that the Philippines is an attractive place for investment," he said.

"The Philippines is one of the exceptional countries to see an upward economy. One of the best in Asia," Mr. Usui added.

The country’s growth, along with Malaysia’s, last Friday prompted the ADB to revise its 2012 forecast for the region to 5.3% from the 5.2% announced in October. The outlook for next year was maintained at 5.5%. -- N. M. Gonzales