BOTTLENECKS to growth will continue to keep the country’s gross domestic product (GDP) below pre-crisis levels, albeit at a higher projected growth rate in 2009 and 2010, according to the Philippine Quarterly Update (PQU) released by the World Bank on Wednesday.

The bank said the bottlenecks to growth include poor business climate, infrastructure, education and fiscal consolidation. The Washington-based lender revised its GDP projections for the Philippines upward from its PQU July 2009 edition.

Since the beginning of the crisis, the World Bank has released quarterly updates for the Philippines. The last PQU was released in July 2009. In July the bank projected that the economy will post a contraction of 0.5 percent in 2009 and a growth of 2.4 percent in 2010.

However, the bank’s projection remained at 4 percent in 2011 while downward revisions were made for growth in 2012 and 2013 to 4.3 percent from 4.5 percent, and 4.5 percent from 5 percent, respectively.

“We are raising our GDP growth forecast to 1.4 percent in 2009 to 3.1 percent in 2010. [However], the pace of expansion will be lower than before the crisis, as bottlenecks to growth become more binding constraints,” the bank said in the Philippine Quarterly Update, whose release coincided with the launch of the bank’s November edition of the East Asia Update.

“Achieving more rapid and inclusive growth in the less hospitable post-crisis environment—one that would allow the country to resume convergence with the more advanced countries in the region—will depend on determined implementation of reforms to improve the business environment, education and infrastructure, so as to enable companies to move closer to the technological frontier, as well as maintaining sound public finances,” the World Bank added.

The bank said reforms have been put in place to address inadequate infrastructure, particularly in transportation and energy, weak investment climate due to governance concerns, and historically weak public finances.

However, the bank said these efforts have been in the pipeline for many years and no significant achievements have yet been made to achieve these reforms.

Further, the bank said these structural weaknesses may also be accompanied by an expected slow increase in export growth due to slow expansion in world trade volumes in 2010 and limited prospects for international market share gains.

“The post-global recession external environment facing developing countries is likely to be less favorable than before. While the Philippines was less affected by both the global financial crisis and the global recession, part of the reasons for this relative good performance can, paradoxically, be traced to structural weaknesses that have led to subdued growth on average,” the bank said.

The bank said the main reasons  it revised its projection for the Philippine economy upward from July was the better-than-expected overseas Filipino worker (OFW) remittance growth. The bank now sees OFWs’ remittance increasing by 4 percent in 2009 and 5 percent by 2010.

The PQU said typhoons Pepeng and Ondoy will even provide a positive boost to the country’s economy. The report stated that recent research showed that remittances act as an insurance to households affected by natural disasters.

In fact, the report stated, an average of 60 percent of household income lost through natural disasters is replaced by remittances. With the recent typhoons hitting Metro Manila, where a large amount of middle- and upper-middle-class households reside together with OFW beneficiaries, the bank expects remittances to increase.

However, even with a higher growth in remittance inflows, pre-crisis levels were in double-digit growth. Further, while it was true that typhoons provide an opportunity to increase remittances, the typhoons only make hitting precrisis growth generally difficult.

“Remittances are staying strong. Government consumption and public construction will continue to benefit from the national government’s spending in the remaining months of 2009.