By ALBERT CASTRO

The Philippines is less vulnerable from external shocks, making it better poised to weather the slowing global economy, the Asian Development Bank (ADB) yesterday said.

Tom Crouch, ADB deputy director general for Southeast Asia, said the Philippines "is in a much better position to handle the economic turbulence" given fiscal authorities’ handling of the fiscal environment.

"Although it is adversely affected by global factors, it does not derail the possibility to achieve higher economic growth," said Crouch.

Crouch said the Philippines had learned "the hard lessons" of the 1997 Asian financial crisis and "took it to heart," helping it to weather the added turbulence caused by current US financial crisis.

"It is impossible to be insulated from the external factors but it could be less if not for the actions put in place," he said.

"There had been changes in economic fiscal environment that makes the Philippines less vulnerable," he added.

Crouch noted that this was further elaborated in the government’s decision to move the target of a balanced budget to 2010.

The continued inflow of remittances and the resiliency of the country’s services sector will also help the economy to grow by 4.5 percent for the whole year, the ADB projected, though the figure is a 150 basis point lower from the lending agency’s forecast in early 2008. The Philippines grew by 4.6 percent in first semester.

It was also a big plus that the government resisted calls from pressure groups to take out the VAT in oil, contributing to the fiscal consolidation.

Going forward, the Philippines has the chance to improve growth to 4.7 percent, Crouch said.

The ADB see inflation to slowdown to 8 percent in 2009 from an average of 10.5 percent this year. The oil is expected to average at $109 per barrel, from this year’s projected $120 per barrel.