First Metro Investment Corp., the investment banking arm of the Metrobank Group, said Thursday the economy is expected to grow between 7 percent and 7.5 percent this year, on the back of robust demand, the implementation of the first package of the Comprehensive Tax Reform Program and the construction of massive infrastructure projects.
“We expect the growth of the Philippine economy to accelerate this year. All engines of growth are up and running at a faster pace,” First Metro president Rabboni Francis Arjonillo said in a news briefing in Makati City. The gross domestic product expanded 6.7 percent in the first three quarters of 2017 from a year ago.
“The country’s economy will remain as the best performing in Asean. We are experiencing a demographic sweet spot that will continue to push consumption expenditure. There’s a revival in manufacturing, and the country’s external position is strong,” Arjonillo said.
He said with the passage of the Tax Reform for Acceleration and Inclusion Act, the government’s ‘Build, Build, Build’ program was anticipated to go “full steam ahead,” which would drive economic expansion further.
Under the program, the government wants to build more roads, bridges, airports, seaports, railways, water and irrigation projects around the country to spur more economic activities. A 24-kilometer subway is planned to be constructed in Metro Manila to decongest the metropolis of heavy traffic.
Arjonillo said infrastructure spending as a percentage of GDP was anticipated to grow by 6.1 percent this year.
Arjonillo said other factors that could drive economic growth faster this year are the rebound in exports, stable remittances from overseas Filipino workers, business process outsourcing revenues and growth in the tourism industry.
University of Asia & the Pacific professor Victor Abola said the massive infrastructure projects would be a critical factor for the faster growth of the economy. “A 7 to 8 percent growth with low inflation is doable until 2022,” Abola said.
Abola said inflation was expected to go up to a range of 3.5 percent to 4 percent this year as a result of higher-than-expected oil prices and the impact of Train. Inflation in the first 11 months of 2017 averaged 3.2 percent, within the target range of 2 percent to 4 percent.
Finance Undersecretary Gil Beltran said a GDP growth of at least 7 percent is doable this year. He said this would also enable the government to sustain a manageable inflation environment going forward.
“Low inflation is an indication that the country’s macroeconomic fundamentals remain strong. Solid fundamentals backed by Train 1 implementation, rice sector reform and the ‘Build, Build, Build’ policy will push the country’s growth to 7 percent to 8 percent this year and sustain manageable inflation,” Beltran, who is also the DoF’s chief economist, said.
President Rodrigo Duterte signed the tax measure into law on Dec. 19. Train exempts compensation earners and self-employed individuals with an annual taxable income of P250,000 and below.
Beltran said inflation likely eased further to 3.2 percent in December from 3.3 percent in November.
