Philippine Growth Seen Resilient Despite Weak External Outlook — ADB
MANILA, PHILIPPINES (25 September 2019) — Philippine economic growth this year will be slightly lower than earlier forecast on the back of a slowdown in the global economy and domestic investment. But the economy should recover its growth momentum in the near term, with domestic private consumption holding up well along with supportive fiscal and monetary policies, according to a new Asian Development Bank (ADB) report launched today.
In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2019, ADB revised its forecast for Philippine gross domestic product (GDP) growth to 6.0% in 2019 and 6.2% in 2020, against its previous forecast of 6.4% for both years. The downward revision in growth comes from the slowdown in domestic investment in the first half of 2019 mainly caused by the delayed passage of the 2019 national budget, which held back public expenditure, particularly on infrastructure.
“Public spending should regain traction for the rest of 2019, with the government committed to catching up with its spending plans, especially as new and larger infrastructure projects get underway,” said ADB Country Director for the Philippines Mr. Kelly Bird. “The recovery in public spending should also boost private consumption, which is currently well supported by steady overseas workers’ remittances, moderate inflation, and low unemployment.”
Public expenditure next year is expected to provide a further boost to the economy, with the proposed 12.0% increase in the 2020 national budget. Higher spending on infrastructure and social services, such as health, education, and conditional cash transfers to poor households, will be supported by additional tax revenues, including the proposed higher taxes on alcohol products, among other measures under the government’s comprehensive tax reform program.
The outlook for exports remains weak in light of the slower-than-expected economic growth in major industrialized economies, which are among the Philippines’ largest export markets. However, investor sentiment in the country remains broadly positive, with a pickup in business confidence, as seen from the recent Bangko Sentral ng Pilipinas survey.
Inflation is expected to slow to 2.6% in 2019 and 3.0% in 2020, significantly lower than previous ADB forecasts, largely on improved domestic rice supplies following the lifting of quantitative rice import restrictions in February this year, according to the report.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.