The World Bank has raised its growth forecasts for the Philippines for this year and the next, saying prudent economic policies coupled with political stability will aid in its faster expansion.
Also, the multilateral agency said developing East Asia, excluding China, would grow at a moderate pace this year with some help from strong economic expansion in the Philippines.
For this year, the multilateral agency now sees the Philippines expanding by 6 percent, becoming one of the fastest-growing economies in Asia and the Pacific.
It was the third time the World Bank raised its forecast for the year.
For next year, the World Bank said, the Philippines could grow by 6.2 percent. The agency last October projected growth at 5 percent.
The adjustments in the World Bank’s forecasts came after the government reported a surprising growth rate in the quarter. The country’s economy grew by 7.1 percent during the period, one of the fastest rates in the region.
As a result, the Philippines’ gross domestic product growth averaged 6.5 percent in the first three quarters of the year.
Growth in the first three quarters was credited to higher government spending, increased household consumption, and higher investments by local firms. Increased foreign direct investments in the business process outsourcing sector also partly aided in the robust growth, officials said.
In the World Bank’s “East Asia and Pacific Economic Update,” the multilateral agency claimed that the so-called Developing East Asia region would grow 5.6 percent in 2012, from 4.4 percent in 2011.
“The rebound in Thailand following the floods in 2011, strong growth in the Philippines, and relatively mild slowdowns in Indonesia and Vietnam contributed to this recovery,” the World Bank said in a statement concerning the update.
Looking ahead, the strong performances of Indonesia, Malaysia and the Philippines will boost Developing East Asia to 5.7 percent in 2013 and 5.8 percent in 2014, the World Bank said.
Another bright spot in the region is Myanmar, which continued to accelerate in 2012, posting GDP growth of 5.5 percent despite concerns in infrastructure and other sectors.
As for growth risks, the World Bank noted that problems in the eurozone, the “fiscal cliff” now troubling the United States, and a possible sharp decline in the growth of investments in China could slow the region’s momentum.
“If a shock in growth were to occur, most countries could counter the impact by easing their fiscal policies. For economies in the region that face difficulties in budget execution … fiscal interventions aimed at increasing private domestic demand such as targeted social assistance or investment tax credits, are very important,” said World Bank senior economist Keiko Kubota, the main author of the report.
The larger East Asia and Pacific region, meanwhile, is projected to grow at 7.5 percent in 2012—lower than the 8.3 percent registered in 2011. In 2013, it is expected to recover to 7.9 percent.