MANILA, Philippines >> The World Bank said Monday the Philippines needs to accelerate reforms to allow for sustained economic growth above 5 percent a year to improve the lives of the poor and catch up with its Southeast Asian neighbors.

The central bank is awash with dollars while inflation is low, and government finances manageable, the World Bank said in a report, calling the present "an opportune time for the country to move up to the next level."

"A huge window of opportunity currently exists for speeding up critical reforms," said World Bank Country Director Motoo Konishi.

"Besides having strong macroeconomic fundamentals, the country is benefiting from political stability and a popular government that is seen by many as strongly committed to improving governance and reducing poverty."

The report forecast economic growth of 4.2 percent in 2012 and 5 percent in 2013, up from 3.7 percent last year.

It said stronger public finances and competitiveness are needed for rapid growth of above 5 percent — the same level achieved by neighboring countries that led to greater poverty reduction.

The bank suggested more focus on key reform areas such as boosting public financial management, increasing tax revenues and enhancing competitiveness through better regulation. It also called for reducing the cost of doing business, addressing infrastructure bottlenecks and improving workers’ skills.

Konishi noted the progress the government has achieved so far but said it needs to act faster to get more broad-based support from policymakers, civil society and the private sector to benefit the poor.

More than a quarter of the population of 94 million lives below the official poverty threshold and half of the population are vulnerable to poverty. The middle class remains small at about 15 percent, with about a third of them living or working abroad.

Their remittances — about 10 percent of the annual GDP — are a lifeline for the economy, which is driven by domestic spending.

Karl Kendrick Chua, the main author of the report, urged a quicker pace of reform to improve the level and quality of employment in the country.

Better skills will in turn attract more investments as multinational companies shift from countries such as China where costs are rising, he said.

"In a scenario of a lingering global slowdown, domestic demand, in particular investments and government spending, will have to play a bigger role in achieving the country’s growth targets for 2012 and beyond," said Chua.

The report said the global economic slowdown may affect employment in the electronics sector, which accounts for half a million jobs and indirectly supports several hundred thousand other jobs.