MANILA - The Asian Development Bank (ADB) has downscaled its previous 2.5% economic growth estimate for the Philippines this year on the back of weaker exports, imports, and domestic consumption.

In its updated Asian Development Outlook report released Tuesday, the Manila-based lender said the country is likely to post a gross domestic product (GDP) growth of 1.6% this year as the economy performed worse than expected during the first half of 2009.

The Philippines managed to post a modest 1% growth in the first 6 months, owing to sustained remittance inflows and lower inflation.

But the ADB said these growth drivers were offset by "a sharper than anticipated slowdown in private consumption, coupled with a slump in exports and weakness in fixed investment," which cut the GDP growth rate more than expected.

Private consumption growth pulled back to 1.8% in the first 6 months from the 4.6% recorded in the same period last year. Exports and imports, meanwhile, continued to post double-digit declines in the past months.

"Full-year growth will be lower than forecast in March," the ADB said.

Next year, the ADB sees the Philippine economy posting a higher growth of 3.3%, to be driven mainly by better business sentiment, election spending, and a smooth transition in government.

The figure is 0.5% shy of the country's 3.8% economic growth in 2008.

Revisions

In March, the ADB said the economy would likely expand by 2.5% this year due to weakened global demand for the country's goods and services. At that time, the multilateral lender's projection is lower than the government's estimate of at least 3.7% GDP growth.

By July, the lender said it may lower its growth forecast for the Philippines, but stressed that the country is unlikely to enter into a recession this year.

The government has lowered its growth projections to a range of 0.8% to 1.8% as the economy posted a dismal 0.6% growth for the first 3 months of the year.

In the second quarter, however, the Philippines showed a 1.5% growth, which brought the country's first half GDP to 1%.

This has led the country's economic managers to consider revising yet again their growth projections for the country. Early this month, National Economic and Development Authority Head Augusto Santos said that they are working on a possible upward adjustment on the country's growth targets for 2009.