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MANILA - (UPDATED 3:31 p.m.) The World Bank on Thursday raised its growth forecast for the Philippine economy this year to 4.6 percent from an earlier estimate of 4.2 percent.
The forecast upgrade comes after the Philippines' gross domestic product grew a faster-than-expected 6.4 percent in the first quarter.
"Growth will be driven by higher government spending, given continuing improvements in the efficiency and pace of disbursements," the Washington-based lender said in its Philippine Quarterly Update.
"Remittances are also expected to continue to grow, albeit at a slower rate. Services will remain stable, supported by additional employment from the business process outsourcing industry," the bank said.
The Philippines’ economic momentum however is facing strong headwinds from the global economy, growth in which is projected to slow down to 2.5 percent this year, from 2.7 percent in 2011, the bank said.
Growth rates of the Philippines’ major export markets are forecast to remain anemic, with the euro zone projected to suffer a 0.3 percent decline in real GDP this year. China is also expected to grow slower.
This global slump may intensify, affecting some sectors in the Philippine manufacturing industry such as electronics, thus causing job losses, the bank said.
Despite the global economic slowdown, the Aquino administration remains upbeat about the Philippines' growth prospects, as it forecast an up tick in GDP growth for the second quarter as well.
Philippine economic managers have kept their 5-6 percent GDP growth target for this year.
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