WB warns against economic ‘overheating’

Urges PH, other countries to start containing inflation


The World Bank has warned that the Philippines and a few other Asian countries were facing threats of overheating and suggested that policymakers start shifting focus from boosting economies to containing the buildup of inflationary pressures.

“Though the developing economies of East Asia are generally well prepared to absorb external shocks, an emerging concern is the risk of overheating in some of the larger economies,” the World Bank said in its latest outlook report for East Asia and the Pacific released Monday.

The bank said measures previously implemented to fuel economic growth of the concerned countries were now ripe for withdrawal. It explained that robust growth rates could eventually lead to inflationary problems if policies would remain the same.

“Continued demand-boosting measures may now be counterproductive. Countercyclical demand policies have helped sustain growth, but they may now risk stoking inflationary pressures and amplifying the credit and asset price risks that are emerging in the context of strong capital inflows into the region,” the World Bank said in the report.

In the case of the Philippines, the Bangko Sentral ng Pilipinas brought down interest rates to historic lows in 2012 in a bid to accelerate economic growth.

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  • rickysgreyes

    Actually, mura umutang ngayon, so if you have steady income, now is the time to put up your house and/ or that business you wanted. Go to several banks and canvass. You will see what I mean. Hindi pa mag- overheat yan while BPO and OFWS are here. What government should do toprevent overheating is to get those Japanese manufacturers to Subic and Clark. Also the South Koreans, who are afraid their businesses could be nuked by the North.

  • latino_boom

    I hope this heat will be felt by the majority of The Filipino Population

    • Facebook User

      You must mean “progress” …that overheating will be felt only when it crashes.

      It can be “felt” not by:
      1. lower borrowing costs / loan interest rates as compared to previous years
      2. Bigger profits when stock trading
      3. Imported items like Iphones being a little more affordable than in previous years.

      But if you want to benefit from this and not just feel it, I suggest starting your own business. Common employees (like me – I would say you too, but I didn’t want to assume), are typically the last to get the trickle down effect.

      • latino_boom

        hmmm…why are you hoping it to crash? FYI I never see myself being an employee and as far as I can see am paying less interest on my loan than during GMA ….I don’t know what are you trying to imply with that iphone stuff never liked iphone and never been materialistic of course am not that stupid to think otherwise…but then again a cheap mobile phone is not the barometer of the economy as whole …but then again a cheap basic food and services might work…a low interest rate to borrow money to put up a business would be nice too if you have the will to do it and if you have a good credit history

  • carlcid

    While the economy is in danger of overheating and hot money inflows expose the country to stock and real estate bubbles, administration officials are too busy bragging and blowing hot air to care. I can only hope that our economic managers take heed of the dangers of bubbles bursting and do something before the muck hits the fan.


    HINDI ba nga fnag-iinit, e, overheating na? Na sa primera pa lang ang takbo ng dyip ng bayan…….hayaan na munang maka-tersera ito bago magpalabas ng overheating…..baka masindak ang mga kabayan sa salitang yan!

  • ethicsingov

    I apologize if its out of topic but because Inquirer didn’t write about it, please allow me to comment. If Kris Aquino is the top taxpayer in 2011 and billionaires like Henry Sy is 15th, something is very wrong on the picture. Is it not something BIR should investigate? Taxation is an obligation not voluntary. It’s very unfair to ordinary workers who pay their taxes right and are withheld every payday while the rich can pay as much and when as they please.

    • Bangon Pinoy

      What I see here is that the bulk of Sy’s earnings is based on capital gains which are taxed automatically every time he sells his stocks. Kris however has salary being taxed during the tax season. What was being reported now is only based on salary and this does not include earnings from investments where taxes are automatically debited during transaction with the investment house/broker.

      • ethicsingov

        Huh? Dito, income from investments and other sources whether withheld or paid outright is reported in the personal income tax return.

      • Facebook User

        Nope. Tax withheld is reported in the ITR. Other Taxes you paid – capital gains, VAT, excise, even real property taxes aren’t in it.

        So if Henry Sy bought and sold a million hectares of land for 100% profit, it wouldn’t show up on his ITR. And if he bought an additional 1 million shares of SM and it doubled in price, and he sold those 1 million additional shares, he would have paid the VAT and Sales tax – as well as paid taxes on whatever dividends he got – but it would not be written on the ITR.

        If SM paid him, as Chairman, 10 million pesos a year, then his ITR would reflect something like 3.2 or 3.3 million in taxes paid.

  • Weder-Weder Lang

    So what else is new?

    Asian economies possibly overheating now. Influx of hot money. Bubble here, bubble there. Excess inventory in real-estate development. Increasing NPLs. PH companies raising capital by floating bonds in dollars abroad. Ultra-low interest rate by Asia to counter beggar-thy-neighbor ultra-low interest rates of ECB and US Fed. On top of which, Asia has to counter the various QEs of ECB, US Fed and BOJ.

    World Bank doesn’t like it hot, it only want what’s good for EU and US. Not for developing economies.

    • David Bobir

      you will reap what you sow

    • TruthHurts

      True. It doesn’t want third-world countries to become secure or independent or comfortable, lest the US and the EU lose their leash on them. The entire globe must become their dogs. That’s the bottomline. The economic rhetoric is just plain propaganda. This is about political control.

      The Worldbank along with IMF, historically and factually have become the chief architects of policies that are responsible for the worst inequalities and the explosion of poverty in the world, especially in Africa and among other third-world countries.

      During the 1990s, the World Bank tightened standards for aid to developing nations. The requirement for distressed nations to get the cash was deregulation, liberalization of markets, privatization and the downscaling of government. This had an even deeper ruinous effect on the nations. It further depressed wages, increased low-wage employment, stunted manufacturing growth, escalated prices, and retarded development projects. And since most of these people employed could barely support themselves and their families, it created a spiraling cycle of poverty.

      The World Bank’s draconian lending policies and requirements and heavy handed political domination came under especially bitter criticism in Sub-Saharan African countries following the first major global energy crisis in 1979. The Bank forced the borrowing nations to drastically cut government spending on health, education and public services under the guise of curbing corruption, waste and promoting good fiscal management. This is what they are trying to promote in the Philippines currently which is fondly aped by our ever-gullible BSP.

      The restrictions are supposed to further the expansion of labor intensive manufacturing enterprises, infrastructure development, and inflation reduction. History declares that just the opposite happened among the countries who followed their advice. Inflation skyrocketed, food shortages increased, price controls and subsidies on food were scrapped, and labor regulations were watered down or eliminated.

      Poverty in the nations worsened.

      If the Philippines is wise and still hopes to survive its cycle of massive poverty, the last thing it would do is to listen to the WorldBank or the IMF.

    • Facebook User

      I disagree. The warnings are given so that we don’t end up like them. The U.S. failed to see the housing bubble. Europe didn’t stop the borrowing problem of some of the countries.

      And if the Philippines keeps spurring growth (and the wrong kind – hot money – at that) we’ll create our own bubble and crash back without even tasting real progress.

      A lot of what you talk about seems pseudo-intelligent. Unfortunately it’s just intelligent-sounding noise whose sole purpose is to mislead readers and vent out whatever angst you have in life.

      For everyone else out there, think of it this way: money is money, and these big banks and big corporations will just go to where-ever it is or whomever has it. They don’t choose sides or allegiances. Whatever biases misanthropes like Weder-Weder Lang and TruthHruts see are nothing more than reflections of their own bitterness.

      • Weder-Weder Lang

        You dissenting opinion, informed by ignorance and therefore inconsequential, is noted.

        Next time, make your assertions with facts. The US saw the housing bubble as early as 2005 and 2006, if you’ve been following Paul Krugman and Robert Shiller. But since you are clueless and ignorant about these names, it’s pointless to go on arguing with ignorance.

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