ADB hikes RP growth outlook to 5%
2010-07-20

AS the global economic recovery ushers in improved trade volumes and increased investments, the Asian Development Bank (ADB) has revised its growth forecast for the Philippines to 5 percent in 2010.

In the July edition of the Asia Economic Monitor (AEM), the ADB said the Philippine economy is likely to grow faster than the 3.8-percent forecast in the ADB Outlook and 3.3 percent in the 2009 AEM.

The ADB, however, kept its growth forecast for the Philippines in 2011 at 4.6 percent, as indicated in the ADB Outlook published in April.

For developing Asia, the ADB said it now expects growth to hit 7.9 percent in 2010, up from the 7.5 percent forecast for 2010.

Similar to the Philippines, the growth outlook for developing Asia in 2011 was kept unchanged at 7.3 percent.

“The stronger-than-anticipated export rebound and much-improved consumer confidence have helped the region’s economies recover faster than we expected. We are seeing the newly industrialized and Southeast Asian economies leading the way,” ADB chief economist Jong-Wha Lee said in a statement.

While the expectations for growth were revised upward and show a “V”-shaped recovery for developing Asia, Srinivasa Madhur, ADB Office of Regional Economic Integration senior director, said this does not necessarily mean “victory” for developing countries.

The ADB said there are three major risks to the positive outlook for emerging East Asia. These risks are a disruption in the recovery in advanced economies; destabilizing capital flows; and unintended policy errors while unwinding the stimulus measures.

“While most emerging East Asian economies are assured of a sharp V-shaped recovery this year, it is too early to say that the ‘V’ stands for victory. Ensuring the sustainability of the recovery depends heavily on the correct timing, policy mix and pace at which economic stimulus is withdrawn. The private sector must be strong enough to take over,” Madhur said.

For countries like the Philippines, Indonesia and Vietnam, unwinding the exit strategies need to be done soon. The ADB also said weaning countries from their stimulus packages would have to be done carefully to avoid “unintended policy errors” that could be detrimental to growth.

In economies like Korea, Malaysia, Singapore, Taipei and Thailand have already started to implement exit strategies. The ADB said tightening has already begun in these countries and should continue at an appropriate pace.

“It’s critical for each country to withdraw the stimulus at an appropriate pace but greater regional coordination, especially on exchange rates, could spur regional demand and help global economic rebalancing,” Madhur said.

Meanwhile, the ADB said economic prospects for the Association of Southeast Asian Nations are also good for 2010 after a tough 2009. Leading indicators continue to improve, with strong industrial production growth and rising consumer confidence. The Asean is forecast to expand 6.7 percent this year before moderating somewhat in 2011.

ADB raised its growth forecast for all developing Asia to 7.9 percent, from April’s 7.5 percent projection for this year. The 2011 forecast remains at 7.3 percent.

Developing Asia comprises 45 member-countries of ADB and covers Central Asia, East Asia, South Asia, Southeast Asia and the Pacific.

http://www.businessmirror.com.ph/index.php?option=com_content&view=article&id=27956:adb-hikes-rp-growth-outlook-to-5&catid=23:topnews&Itemid=58

Author: Cai U. Ordinario
Source: Business Mirror
Date Published : 2010-07-28

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