Phl economy to expand 5.4% this year – UN report

The economy is forecast to expand by 5.4 percent in 2013 and by 5.5 percent in 2014, after its gross domestic product (GDP) is expected to grow by 6.2 percent in 2012, a United Nations (UN) report said.

The UN World Economic Situation and Prospects (WESP) 2013 is a report released by the UN Department of Economic and Social Affairs (UN/DESA), the United Nations Conference for Trade and Development (UNCTAD) and the five UN regional commissions.

The report said the East Asia region, which includes the Philippines, will likewise register a stable growth against negative or disturbing growth patterns for the developed nations and the world, as a whole.

This year, the region is forecast to grow by 6.2 percent and 6.5 percent in 2013 and 2014, respectively. The region is expected to grow by 5.8 percent in 2012, from a strong 7.1 percent in 2011.

The report said that economic woes in Europe, Japan and the United States, and the sharper-than-expected slowdown in China, weighed on economic growth in East Asia in 2012.

“Household consumption, however, continued to grow at a robust pace, supported by resilient labor markets and lower inflation,” the WESP said.

Indonesia, Malaysia, Thailand and the Philippines meanwhile will see solid growth “where buoyant consumption and investment demand largely offset lower net exports,” the report also said.

“The strong growth performance in the Philippines and Thailand was supported by significant rises in public investment, but also reflects a base effect following weak growth in 2011. Growth in this group of countries is forecast to remain fairy stable in 2013,” it said.

Inflation declined significantly in East Asia over the past year as domestic demand moderated and many international commodity prices eased. For the region as a whole, consumer price inflation averaged 2.9 percent in 2012, well below the 4.9 percent recorded in 2011.

The UN expects the region’s central banks to maintain a cautious approach to monetary policy as uncertainties and prospects of negative contagion from the developed nations remain in the horizon.

The WESP meanwhile cautioned the East Asia region against downside risks to economic growth.

It said that a sharp deceleration in the pace of growth in China would have a severe impact on economic activity throughout the region, with high-income countries likely to suffer most from lower demand for their exports.

Similarly, a further deterioration of the sovereign debt crisis in Europe remains a major risk factor for East Asia since it would likely lead to renewed turmoil on financial markets and a sharp contraction in global trade activity.

In contrast, the world’s economy is expected to remain subdued as it is weighed down by the job crisis faced by the developed nations.

It is expected to grow by 2.2 percent in 2012, followed by creeping growth of 2.4 percent in 2013 and 3.2 percent in 2014, “a significant downgrade from the UN’s forecast of half a year ago.”

The WESP said that the major developed economies weakness is the root of the global economic slowdown.