THE Asian Development Bank said in a new report that the Philippine economy is growing at a slower rate than what is required for the country to succeed in reducing poverty. It also said there is no immediate prospect of a significant improvement in economic growth.

In its annual Asian Development Outlook, the Manila-based lending agency noted that the country’s Gross Domestic Product (GDP) grew by 5.1 percent last year, lower than the government’s target of between 5.3-6.3 percent. Meanwhile, Gross National Product (GNP) grew by 5.7 percent.

These growth rates, the ADB said, “fall short of what is required to make significant inroads into persistent high levels of poverty and unemployment.”

Official estimates place the country’s poverty incidence at 33 percent of the population. Unemployment hovers at around 8 percent.

The Bank noted that the largest contributor to the country’s GDP growth last year was personal consumption expenditure, buoyed, in turn, by remittances from overseas workers. Remittances pushed up the performance of the banking sector; and remittances were also responsible for reining in the negative impact of a widening trade deficit.

It was also the exodus of workers, said the Bank, which eased the pressure on the country’s domestic labor market.

The Bank warned against such high dependence on overseas workers’ remittances and consumption. “Emigration on this scale,” the report said, “comes at a high cost in terms of loss of knowledge and skills, and can have high social costs as well.”

ADB projects that the country’s GDP will grow by 5 percent this year, and by 5.3 percent in 2007.

A key risk in the short-term, said the Bank, is the intensity of the La Niña rainfall: “(This) could reduce agricultural production and have spillover effects on the food and beverage subsector.” In 2005, agriculture posted a weaker performance than the previous year, contributing to the overall slip in the economy’s performance in the same period.

“Political uncertainty has yet to completely subside, and this has the potential to undermine growth prospects,” the Bank added, speaking of its immediate outlook.

In the medium-term, the Bank estimates, GDP will grow by an average 5-6 percent every year to 2010. The forecast falls below government’s target of 6.3-7.3 percent for 2006, increasing to 7-8 percent in 2009 and 2010.

The Bank described the Southeast Asian region’s overall economic prospects as “checkered”: Indonesia and the Philippines, for example, will slow down this year, while Malaysia and Thailand will post faster growth rates.

Asia, in general, will perform well, riding on the rapid growths of the People’s Republic of China and India, the ADB said.

Access ADB’s outlook for the Philippines here. This is the entire Asian Development Outlook 2006.

5 Responses to RP growth not enough to lick poverty — ADB

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Barako Café » Blog Archive » About the economy

April 8th, 2006 at 6:10 pm

[…] The ADB says the economic growth that GMA’s spin doctors enjoy talking about isn’t sufficient to solve the problem of poverty in the country. As for the unemployed who can’t get jobs because they’re not trying, Uniffors posts two responses: Prof. Ofreneo’s and Manuel Buencamino’s […]

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INSIDE PCIJ: Stories behind our stories » Unmasking the myth of ‘Arrovonomics’

April 26th, 2006 at 6:36 pm

[…] Arroyo is also engaging in what economists call the “Ponzi game” of borrowing to repay maturing principal. A recent study of the Asian Development Bank (ADB) said the Ponzi game played by Arroyo is working but is not sustainable. To which Pascual agreed, adding that the Ponzi game, whose main strategy is to keep treasury bills below market rates, cannot be played indefinitely without squeezing out bank profits. […]

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Cecile Impens

April 27th, 2006 at 2:12 am

Arroyo never stopped her media propaganda in telling the country economy is in “good health”! How can she explain the almost 12% unemployment rate (if not more) thus resulted to massive influx of Filipinos for jobs abroad (1 million left the country in 2005). How come the 2005 inflation rate rose to 7.6% ; and the negative growth of investment if the peso is really stable? . These are just the indicators of the Philippines economic weak performance! The only thing positive was the banks double-digit growth, thanks to the OFWs’ remittances at the staggering $10.7 billions. Without these “present day heroes” take-home pays that helps the country’s dollar reserve, Arroyo has nothing to boast about!

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INSIDE PCIJ: Stories behind our stories » Asian women spending more — MasterCard study

May 17th, 2006 at 5:26 pm

[…] In general, it is indeed personal consumption that has consistently shored up the Philippine economy. In its latest Development Outlook for the Philippines, the Asian Development Bank (ADB) noted that the largest contributor to the country’s GDP growth last year was personal consumption expenditure, buoyed, in turn, by remittances from overseas workers. […]

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INSIDE PCIJ: Stories behind our stories » The Pinoy’s mall world

May 20th, 2006 at 8:32 pm

[…] At the time that Balgos wrote her piece, and this she specifically noted, personal consumption grew by four percent from the previous year. Recently, the Asian Development Bank (ADB), in its Annual Outlook for the Philippines noted how the growth posted by the country’s economy last year was generated mostly through personal consumption. […]

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