ECONOMISTS at ANZ Research have revised upward the bank’s growth forecast for the Philippines for this year and 2017, taking into account an above 7% expansion seen during the third quarter and the sustained strength in private investment which are seen supporting the country’s robust growth story.
They said Philippine gross domestic product (GDP) is now poised to grow by 6.7% this year and 6.9% next year, higher than its September estimates of 6.4% and 6%, respectively.
“Strong expansion in private investment offset a sequential contraction in public spending after the election-related boost in the first half of 2016,” ANZ said in its quarterly report, while also pointing out upbeat consumer spending that rose by 7.3% during the third quarter, against a 5% average over the last decade.
A surge in investment and continued strength in household consumption brought the July-September GDP growth rate to 7.1%, the fastest in three years. This also pulled the nine-month tally to a 7% average, matching the high end of the government’s 6-7% growth goal and making it among the fastest-growing economies in Asia.
Both the Asian Development Bank (ADB) and the International Monetary Fund said they are poised to revise upward their growth estimates for the Philippines to factor in the unexpected third quarter result. ADB Country Economist Aekapol Chongvilaivan earlier said the bank is pencilling in a 6.8% forecast for 2016, higher than September’s 6.4%.
“Despite the negative media coverage in the early months of the Duterte administration, economic fundamentals remained strong in Q3,” the bank’s research arm said. “Since the new administration officially took over on 30 June, the government’s economic team has put forth growth-positive policies aimed at speeding up the delivery of the infrastructure program and prioritizing economic development away from the National Capital Region.”
President Rodrigo R. Duterte has been a headline-grabber during the first six months of his presidency due to controversial remarks against foreign governments and leaders, an about turn in foreign policy, and a state-sanctioned drug crackdown which has resulted in thousands of alleged summary killings by both police and vigilantes.
Also expected to sustain the country’s rosy growth momentum are plans to aggressively ramp up public spending, particularly on infrastructure, which should bring the fiscal deficit to 3% of GDP by 2017, well above the 2% cap set by the previous government. Tax reforms put forward by the Finance department — which are expected to raise P600 billion in additional revenue from new measures and improved collection efficiency — are broadly seen to spur further expansion.
In a Dec. 5 report, debt Fitch Ratings said the Philippines is expected to remain among the fastest-growing economies in the Asia Pacific, although it warned that political risks could put pressure on the country’s credit outlook.
Budget Secretary Benjamin E. Diokno has said the country may pull off a 6.9-7% growth rate during the fourth quarter, which if realized would bring the full-year pace to roughly 6.9%. By 2017, the government targets growth of between 6.5% and 7.5%.
08 December 2016
By Melissa Luz T. Lopez
