WB forecasts strong PH growth

Continued expansion seen even with global, domestic headwinds

Local output growth measured as the gross domestic product (GDP) was seen sustained this year at 6.7 percent, the World Bank said on Friday.

The continued forecast expansion of Asia’s third-fastest economy in 2017 was bared in a statement the World Bank sent by e-mail to financial reporters.

The forecast was a reiteration of an earlier assessment in April in which the $314 billion economy was seen drawing on consumption and investment as growth drivers.

“The government’s ability to carry out its investment spending agenda will determine if the Philippines can achieve its growth target of 6.5-7.5 percent over the medium term,” Birgit Hansl, World Bank Lead Economist for the Philippines, said. “In addition, higher private investment levels will be critical to sustain the economy’s growth momentum as capacity constraints become more binding.”

Given recent fiscal trends, government consumption growth was revised upwards, while private consumption growth is expected to expand at 5.9 percent in 2018 and 6.2 percent in 2019.

This was based on actual fiscal performance in which accelerated disbursement brought the five-month budget deficit to P228.39 billion consistent with the massive infrastructure buildup program designed to boost growth not just this year but for the long haul.

Disbursement has ramped up to P1.325 trillion during the period against collection of only P1.186 trillion.

The World Bank said investment growth was upgraded “due to higher public capital outlays, including increased infrastructure spending. Overall, it is anticipated that real GDP growth will increase towards the end of 2018 and into the first half of 2019 with higher election-related public spending.”

The World Bank said investment growth was upgraded “due to higher public capital outlays, including increased infrastructure spending.

Exports, a key driver of growth for the Philippines economy, are projected to moderate in the coming years as global growth is expected to decelerate.

Exports provided the main stimulus to growth last year but has moderated in recent months and grew by only 3.8 percent in May from 4.9 percent the previous April as the sale of electronics and mineral products posted double-digit contractions.

But the World Bank’s June 2018 Global Economic Prospects projected a gradual global slowdown over the next two years, predicated on moderately higher commodity prices, strong but gradually moderating global demand, and incremental tightening of global financing conditions. Uncertainty around global growth conditions has risen, with the possibility of trade and other policy shocks emerging from major economies.

The economy actually grew by 6.9 percent in 2016 and sustained this at a slower rate of 6.7 percent last year. This year, BMI Research, a unit of the global credit watcher Fitch Rating, forecast continued growth for the Philippines averaging 6.5 percent. Another analytics unit called the ASEAN+3 Macroeconomic Research Office or AMRO anticipate continued Philippine expnasion averaging 6.6 percent this year.

Only Vietnam and China grew faster than the Philippines last year when these economies expanded by 6.8 percent and 6.9 percent, respectively.