Philippine economy to remain strong despite global uncertainty, inflation

October 4, 2018

Despite rising global uncertainty and inflationary pressures, the Philippine economy is poised to remain strong and is projected to grow at 6.5 percent in 2018, 6.7 percent in 2019, and 6.6 percent in 2020, according to the Philippines Economic Update (PEU) released Thursday by the World Bank.

Growth slowed in the first half of 2018 due to weak exports of electronics and lower production from agriculture and fisheries due to unfavorable weather conditions.

Growth is expected to speed up in the second half of 2018 and in early 2019 due to rising government expenditure for infrastructure.

The PEU notes there are considerable risks to the current growth forecasts, among them increasing global uncertainty due to trade tensions between the US and China as well as the rising interest rates in the US. This could raise external financing cost and further weaken the peso.

“To manage these risks, maintaining strong macroeconomic fundamentals is key. At the same time, accelerating structural reforms to improve investments in physical infrastructure and make better use of capital, labor, and technology to increase productivity remains a very important agenda for the Philippines,” it said. DMS