By Darwin G. Amojelar, Senior Reporter
THE Asian Development Bank (ADB) on Wednesday raised its economic growth forecast for the Philippines on strong investment inflows and consumption, but warned of a worsening unemployment situation.
In its Asian Development Outlook, the Manila-based lender said the country's gross domestic product (GDP) is likely to expand five percent this year, up from an earlier forecast of 4.6 percent made in September.
"Growth will continue to be driven by investment and consumption," the ADB said.
For 2012, the ADB sees Philippine GDP expanding by 5.3 percent.
A key measure of economic performance, GDP is the amount of final goods and services produced in the country.
The ADB projected that the Indonesian economy will grow 6.4 percent this year and 5.3 percent in 2012; Malaysia, 5.3 percent for both years; Singapore, 5.5 [percent] and 4.8 percent; Thailand, 4.5 [percent] and 4.8 percent; and Vietnam, 6.1 [percent] and 6.7 percent.
The lender's forecast for the Philippines is lower than the 7 percent to 8 percent economic growth target of the Aquino administration in the next six years.
The ADB said its economic outlook for the next two years assumes that monetary policy will be gradually normalized, and that fiscal conditions will be less accommodating amid government commitments to trim the budget deficit.
With rising fuel prices, the ADB said Philippine inflation is forecast to rise to 4.9 percent this year, before easing to 4.3 percent next year.
In the first three months, the country's inflation averaged 4.1 percent, or within the Bangko Sentral ng Pilipinas (BSP) target of between three and five percent.
"Our outlook for the Philippines hinges on the government following through on its plans to reduce the fiscal deficit, and improve governance and the business environment. Jump-starting the planned public-private partnerships will give investment a strong boost," Neeraj Jain, ADB country director for the Philippines said.
The ADB also said that the lackluster growth in employment is still a "chronic problem" in the country.
Despite strong economic growth last year, the unemployment rate fell only slightly to 7.3 percent.
"The underemployment rate also remained high at about 20 percent. The proportion of workers classified as vulnerable—unpaid family members and the self-employed, most of whom are in the informal sector—has declined since 2006, but remains high at nearly 42 percent," the lender said.
Moreover, the lack of jobs drives large numbers of Filipinos to work abroad, the ADB said.
"The lack of jobs has undermined efforts to reduce poverty, with the number of poor actually rising by over three million in the six years to 2009," the lender said.
Jain said most jobs shifted from the agricultural sector to the services sector, while employment in the industrial sector remained practically stagnant over the last three decades.
"And, therefore, labor productivity in the Philippines has insignificantly grown over the last 30 years. There's been practically less than one percent increase in labor productivity in the Philippines over the last three years and that to us is the central issue which explains why poverty has been most abundant in the Philippines," Jain said.
Under the draft Medium Term Philippine Development Plant (MTPDP) for 2011 to 2016, the Aquino administration plans to create an average of a million jobs a year, primarily in the industry and services sectors, with the agriculture sector remaining a net shedder of jobs.
Of the six million jobs target over the plan period, two million will be in the micro, small and medium enterprise (MSME) sector.
The plan also aims for 7.7 million tourism jobs by the end of the plan period, and a doubling of visitor arrivals from three million in 2009 to 6.3 million by 2016, with tourism receipts hitting $4.5 billion.
"If the labor force grows at 2.75-percent annually, the unemployment rate should hover at 6.8 percent to 7.2 percent in the plan period, although it should be noted these numbers do not factor in possible reversals in overseas migration trends as more domestic jobs are created," the draft MTPDP read.
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