MANILA, Philippines - Acknowledging that the Philippines proved to be more resilient in the face of a global financial crisis than earlier anticipated, the World Bank retracted its forecast of a 0.5-percent contraction for the economy this year and set its new projection to a growth of 1.4 percent.

The World Bank likewise revised its outlook on the Philippines for 2010, from a growth of only 2.4 percent to 3.1 percent.

Eric Le Borgne, senior economist for World Bank Manila office, said remittances and the government’s stimulus programs spelled the difference between its old and new assumptions.

It was earlier believed that remittances to developing countries like the Philippines would sharply decline this year because of layoffs in recession-stricken countries in the West.

However, Le Borgne said, remittances to the Philippines remained strong because of the deployment of new workers to alternative labor markets, including the Middle East. Newly deployed Filipinos outnumbered those who lost their jobs.

Earlier, the World Bank said remittances sent to the Philippines would fall by 4 percent from the $16.4 billion recorded last year. Now, it sees a 4-percent increase in the money sent by Filipinos based abroad.

The revised economic growth forecast of the World Bank came after the announcement that Philippines grew by 1.5 percent in the first half.

According to the Arroyo administration, this figure kept the economy on the growth track, expecting it to rise between 0.8 and 1.8 percent for the full year.

“The Philippines avoided a recession, thanks to timely fiscal and monetary stimuli combined with larger than projected inflow of remittances,” the developmental lender said in its latest Philippine Quarterly Report released yesterday.

Nonetheless, the World Bank said the Philippines continued to face challenges.

Ulrich Lachler, lead economist of the World Bank Manila office, said that while the country was performing better than the others in terms of growth, poverty incidence in the Philippines was still relatively high.

“Growth was not widely shared. While the economy was growing, poverty incidence actually increased,” Lachler said, citing 2006 poverty incidence data showing that 33 million Filipinos now live below the poverty line.

Poverty incidence is expected to further rise this year due to the ill-effects of the global economic downturn on the Philippines. Layoffs, especially in the electronics manufacturing sector, are expected to drag down household incomes.

Lachler said measures to address long-standing problems of uninviting business climate, inadequate infrastructure, poor access to education, and weak tax collection should already be put in place.

The bank said the Philippines should attract more investments to generate additional employment, which in turn could help reduce poverty.

The government should also improve tax collection, particularly by having Congress pass proposed revenue-enhancement bills, to enable higher spending for infrastructure and education.

Pending bills include increasing taxes on cigarettes and alcohol and the lifting of tax- and duty-free incentives enjoyed by some businesses.