Philippines - World Bank cuts Philippine growth forecast to 4.2 pct

MANILA, Nov. 22 (Xinhua) -- The World Bank downgraded its growth forecast for the Philippines this year to 4.2 percent as economic woes in the U.S. and Europe dampen the entry of foreign investments in emerging markets.

The World Bank earlier forecast Philippine GDP to grow five percent in 2011.

In its bi-annual East Asia and Pacific Economic Update (EAP Update) released Tuesday, the World Bank said increased global uncertainties and reduced investments will ease growth in the Philippines.

"The Philippines is benefiting from relative political stability and an improved fiscal position, but key downside risks to growth remain," the Washington-based lender said.

The World Bank expects inflow of portfolio investment to remain strong, but believes that inflow of foreign direct investments will moderate as investors become more cautious.

But remittances from overseas Filipino workers will continue to boost the consumption-driven economy. The World Bank also expects the economy to remain resilient on the back of its sound fundamentals.

"The country is well-insulated from the global financial crisis owing to a significant improvement of macroeconomic fundamentals and regulatory reforms already in place following the Asian financial crisis of 1997-98," the World Bank said.

The World Bank said that the Philippine government needs to invest more on infrastructure, education and social protection to improve competitiveness and strengthen the country's resiliency to external shocks.

"It's in this context where the country's program to attract investments in infrastructure development becomes even more important," said World Bank Acting Country Director Chiyo Kanda.

"The government is accelerating the implementation of its public investment and PPP (Public-Private Partnership) programs. Mobilizing private sector resources to boost delivery of essential economic and social services and infrastructure is a step in the right direction," he added.

Editor:Luo Yuan

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