A recovery in government expenditure in the Philippines is seen driving strong economic growth, together with robust private consumption, investment, and exports. Inflation has eased and is forecast to remain moderate. Challenges center on accelerating infrastructure development and advancing investment climate reforms to generate more and better jobs for poverty reduction.
|Selected economic indicators (%) - Philippines||2015||2016|
|Current Account Balance (share of GDP)||4.0||3.6|
Source: ADB estimates.
The economy of the Philippines expanded by 6.1% in 2014, fueled by sustained increases in private consumption, higher fixed investment, and recovery in exports. The pace of growth decelerated by almost 1 percentage point from the average of the previous 2 years, largely on a slowdown in government expenditure.
Private consumption generated more than 60% of the growth in gross domestic product (GDP) last year. Consumer spending grew by 5.4%, benefitting from a 2.8% rise in employment, modest inflation, and higher remittances from overseas Filipinos, which reached $27.0 billion after climbing in 2014 by 6.3%, or by 10.9% in Philippine peso terms.
Strong GDP growth is projected for 2015 and 2016 based on buoyant private consumption, a solid outlook for investment and exports, and recovery in government expenditure. GDP is projected to increase by 6.4% in 2015 and 6.3% in 2016.
Factors that powered private consumption in 2014 - growth in employment, modest inflation, and higher inflows of remittances - are projected to continue through the forecast period.
Excerpted from the Asian Development Outlook 2015.