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ADB forecasts GDP growth of 4.3%

"An upturn in the global electronics cycle, starting in the second half of this year, is projected to lift export growth in 2008 back up to 9.4 percent."

Asian Development Bank

The nation's GDP is expected to grow 4.3 percent this year and a further 4.5 percent next year, the Asian Development Bank (ADB) said yesterday.

Conditions were expected to remain benign despite forecasts for a deceleration in the global economy and a softening in demand for electronics, the ADB said.

The projection matches a forecast made last month by the Directorate General of Budget, Accounting and Statistics (DGBAS) for the nation's GDP growth to reach 4.3 percent. Last year's growth was 4.6 percent, the government's statistics bureau said.

The ADB said that resilient intra-regional trade and robust demand from China is likely to push up exports, providing a buffer against the slowdown in other markets.

Exports are expected to slow by about 4 percentage points to a still-solid 8.8 percent, the ADB said in its Asian Development Outlook.

"An upturn in the global electronics cycle, starting in the second half of this year, is projected to lift export growth in 2008 back up to 9.4 percent," it said.

Domestic demand should recover gradually, bolstered by the modest upturn in investment that started last year and a strengthening in consumer spending.

Public investment is to benefit from new public infrastructure projects in energy, water supply and railways.

Economists have said the nation's economic growth this year will have to rely on domestic demand, as momentum from overseas slows. ADB projections showed that the nation's private consumption is expected to accelerate to 3 percent this year as the credit-card debt problems are resolved.

Inflation is seen at 1.6 percent this year and 1.5 percent next year, the Manila-based bank added.

The ADB said projections are subject to political risks.

"Political uncertainties ahead of legislative elections in December 2007 and presidential elections in March 2008 could unnerve investors, as would any deterioration in cross-strait relations," it said.

On the upside, a possible move to liberalize economic relations with China, such as relaxing limits on investment or restrictions on tourists visiting the nation from across the strait, would boost confidence in the economy, the ADB added.
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