MANILA, Philippines (Xinhua) - The Philippine economy is expected to grow by no less than 7 percent this year, which is well above the country's growth forecast of 5-6 percent, according to economic managers here.
Leading multilateral institutions, such as the World Bank and Standard & Poor's (S&P), have also upgraded their growth forecast and credit rating for the Philippines respectively.
The World Bank has raised its growth forecast for the Philippines for this year and the next, crediting prudent economic policies of the administration of President Benigno Aquino coupled with political stability in the country.
For this year, the World Bank said that the Philippine economy would expand by 6 percent, becoming one of the fastest-growing economies in the Asia Pacific Region. It was the third time that the World Bank raised its forecast for Philippine economy growth of 2012.
The World Bank said that in 2013, the Philippines could grow by 6.2 percent.
The adjustments in the World Bank's forecasts came after the government reported a surprising 7.1 percent growth rate in the third quarter, one of the fastest rates in the whole of Asia, next only to that of China.
The Philippine economy grew by 6.5 percent in the first three quarters of the year on the back of higher government spending, increased household consumption, and higher investments by local firms.
In its "East Asia and Pacific Economic Update," the multilateral agency claimed that the developing East Asia region would grow by 5.6 percent in 2012, from 4.4 percent in 2011.
"The rebound in Thailand following the floods in 2011, strong growth in the Philippines, and relatively mild slowdowns in Indonesia and Vietnam contributed to this recovery," the World Bank said.
S&P has upgraded its outlook on the credit rating of the Philippines from "stable" to "positive", prompting Finance Secretary Cesar Purisima to express confidence that the country will finally get an investment grade in 2013.
An investment grade would mean more confidence on the Philippines to attract more foreign direct investments (FDIs) and thus help in jobs generation.
In a statement released Thursday, S&P said the decision to improve the outlook on the rating of the Philippines was based on the assessment of a favorable political situation in the country as evidenced by the ability of the Aquino administration to push for and implement vital reforms.
The S&P announcement came hours after President Aquino signed the so-called "sin tax" bill that would raise excise taxes on tobacco and liquor.
"We revised the outlook to positive to reflect our reappraisal of the political and institutional factors underlying the ratings, " Agost Benard, credit analyst of S&P for the Philippines, said in the statement.
According to Benard, S&P may decide to raise the country's credit rating to investment status next year if favorable indicators are sustained. These include improving revenue collection, declining reliance on borrowings from foreign creditors, and falling debt burden of the government.
Two other economic indicators contributed in boosting the Philippine economy.
One, remittances from overseas Filipino workers reached a record high in October as global demand for Filipino workers remained strong despite the lingering crisis in the United States and Europe.
Filipino-based overseas workers sent home $1.93 billion in cash in October, the highest monthly figure so far on record, rising by 8.5 percent from $1.78 billion in the same month last year, according to the Bangko Sentral ng Pilipinas (BSP), the country's central bank.
This brought total remittances in the first 10 months of the year to $17.5 billion, up by 5.8 percent from $16.53 billion in the same period a year ago.
The World Bank said it is likely that total remittances to the Philippines for this year will hit $24 billion and make the country the third biggest recipient of money from migrant workers, next to India and China.
There are at least 10 million registered overseas-based Filipinos, fueling spending of over 10 percent of households in the country.
The inflow of portfolio investments or "hot money" to the Philippines also surged to $1.01 billion in November, the highest net inflow in about two years. This was also more than double the $490.35 million recorded in the same month last year.
According to the BSP, the inflows came mostly from the United States, the United Kingdom, Singapore, Luxembourg and Switzerland.
Despite this rosy picture of the economy, however, the National Census Office reported early this week that the country's unemployment rate has risen to 6.8 percent.
"Given the latest labor and employment figures, generating employment and ensuring that these are of good quality remain our greatest challenge," Balisacan said.
But next year, according to Balisacan, the job situation could improve with the expected improved electronics industry, which accounts for more than half of the country's exports.