Dec. 12--THE Asian Development Bank (ADB) on Thursday trimmed the Philippines' economic growth forecast for this year and next owing to weak exports and consumer spending as a result of the global financial crisis.

In its December issue of the Asia Economic Monitor (AEM), the Manila-based lender said the Philippine' gross domestic product (GDP) is likely to grow 3.5 percent next year, or 2-percentage points lower than the 5.5- percent forecast made in July.

GDP refers to the amount of goods and services produced in the country and so is a measure of national economic output.

The ADB projection next year was way below the government's target of 3.7 percent to 4.7 percent.

"After slowing in the first half of 2008, Philippine GDP growth is expected to be sluggish [this year and next] on weak exports and slower private consumption," the lender said.

The National Statistics Office earlier reported that Philippine exports in October contracted by 14.9-percent owing to weak sales of electronic products abroad. This led exports in the first 10 months to grow by only 1.4 percent, below the government's target of between 2 percent and 3 percent.

For this year, ABD sees the economy expanding 4.5 percent, also down from its earlier forecast of 5.6 percent.

The Philippine government is looking at between 4.1-percent and 4.8-percent growth this year.

In the first three quarters of the year, the economy grew 4.6 percent, or lower than the 7.1 percent in the same period last year.

GDP growth posted a 31-year high of 7.3 percent last year, because of high consumption spending brought about by low inflation, higher remittances and better exports growth.

Jong-Wha Lee, head of ADB's Office of Regional Economic Integration (OREI) said 2009 is likely to be a difficult year for developing Asia but it would be manageable if countries respond decisively and collectively.

"The risks to the region's growth outlook are strongly tied to the global outlook through both trade and financial links," Lee said, adding that further financial disruptions could also exert a significant influence on consumer and investor confidence in the region.

The ADB projected that the Indonesian economy will grow 6.1 percent this year and 5 percent in 2009; Malaysia, 5 percent and 3.5 percent; Singapore, 2.3 percent and 1.2 percent; Thailand, 4 percent and 2 percent; and Vietnam, 6.3 percent and 5 percent.

The ADB said the region's policymakers should move swiftly to reduce the risk of a regional credit crunch.

It said policymakers should step up their monitoring of local financial markets and put in place clear policies to deal with stressed institutions. The lender also said that Asian governments should set aside adequate provisions of foreign and domestic liquidity so that credit continues to flow into the economy, and consider a range of policies to contain the spillover effects of the worsening financial conditions and risks arising from weaker growth on regional banking systems.

The AEM also recommended continued improvement of regulation and oversight of financial systems to strengthen transparency and accountability; enhance sound regulation and prudential oversight; mitigate the cyclicality of financial markets; broaden and deepen financial markets to enhance resilience; and reinforce cross-border cooperation.

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