MANILA: The Philippines is being affected by the economic turmoil in the United States and Europe, but strong fundamentals are limiting the impact on the economy, the World Bank said on Thursday in its quarterly report on the Southeast Asian nation.
The World Bank has cut its growth forecasts to 4.5 percent for 2011 and 5.0 percent for 2012, from 5.0 and 5.4 percent previously.
"To better insulate the Philippine economy from external shocks, it is important to maintain strong macroeconomic fundamentals and improve its competitiveness through diversifying exports, strengthening domestic competition, and improving productivity of the services sector," World Bank economist Soonwha Yi said in a statement.
The country has a strong external position, supported by remittances from millions of Filipinos working overseas and net services receipts, the report said, noting rising capital inflows in both direct and portfolio investment.
Private consumption was expected to grow steadily due to lower unemployment, higher government spending and remittances, Yi said, and the government had room to scale up spending on delayed infrastructure projects and its social agenda.
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