Philippine economy may grow at “moderate” pace of 6.4 percent in 2017, rebound to 6.6 percent in 2018

April 6, 2017

The Philippine economy is likely to grow at a "moderate" pace this year compared to the previous year, but to rebound in 2018, the Asian Development Bank (ADB) said on Thursday. Citing the new Asian Development Outlook 2017, Joven Balbosa, ADB's principal Philippine country specialist, said in a press conference growth will moderate to 6.4 percent, but still considered "strong," in 2017, improving to 6.6 percent next year. The Philippine Statistics Authority has revised upward the Philippine gross domestic product growth for 2016 to 6.9 percent from 6.8 percent after upward changes in construction, mining and quarrying, and other services. Balbosa said the projected moderate economic expansion this year reflected partly the "high base effect from last year's figures" and also "rising commodity prices that could affect domestic demand." From January to March, Philippine inflation averaged 3.2 percent, nearing the upper end full-year inflation target of 2-4 percent. ADB is projecting Philippine inflation to hit 3.5 percent this year and 3.7 percent next year. "Growth is expected to recover to 6.6 percent in 2018 as government plans to further ramp up public infrastructure investment," Balbosa said. To cope with neighboring countries, he said the Philippine infrastructure spending should be "7-9 percent" of GDP and this "should be the norm." "We encourage the Philippines to continue to push for the target," he said. He noted the Duterte administration is eyeing infrastructure spending, including investments in roads, railways, ports, health facilities, school buildings, and agricultural works, to equal 5.3 percent of GDP in 2017. ADB said private consumption will continue to rise robustly, though at a moderate pace than last year. "Net exports are expected to contract and temper GDP growth somewhat. While merchandise exports are expected to rebound from lat year, imports will likely rise at a faster pace, reflecting growing consumer demand and investment," it said. In a statement, Richard Bolt, ADB Country Director for the Philippines, said the biggest contributor to the country's growth is investment, both public and private, exceeding the growth contribution from consumption. "Effective implementation of the government's newly announced development plan will help make growth more inclusive and reduce poverty," he said. The ADB cited risks to the Philippine growth outlook, such as lower-than-expected  growth in the country's major trading partners and uncertain trade policies in industrial economies. "Domestically, realizing growth prospects will hinge on the successful implementation of the government's ambitious public investment program, especially infrastructure projects," it said. (Celerina Monte/DMS)