ADB retains Philippine growth forecasts

MANILA, Philippines – The Asian Development Bank (ADB) has kept its 2017 and 2018 economic growth forecasts for the Philippines on the back of robust economic demand and progress on the proposed tax reform plan.

In a supplement to its Asian Development Outlook published on Tuesday, the Manila-based multilateral lending institution said it is sticking with its Philippine growth forecast of 6.5 percent this year and 6.7 percent in 2018 it earlier made in July.

“The concerted effort by the Philippine government to improve public project implementation is bearing fruit, as public investment programs help drive continued economic expansion,” said Richard Bolt, ADB country director for the Philippines.

“A strong focus on infrastructure investment and implementation of tax reform will see the country continue its growth momentum through 2018,” Bolt added.

ADB’s forecast for inflation has been revised down to 3.2 percent from 3.5 percent in 2017 and to 3.5 percent from 3.7 percent in 2018 – well within the central bank’s 2-4 percent target. Inflation rose to 3.1 percent in the first eight months of the year from 1.5 percent a year before, ADB noted.

The domestic economy grew 6.4 percent in the first quarter of the year, moderating from 6.9 percent in the same period in 2016 in the absence of election-related spending that characterized the same quarter the previous year.

Philippine GDP rose 6.5 percent in the second quarter from a year earlier, with Economic Planning Secretary Ernesto Pernia saying the country is “well on track to meeting our full-year target growth of 6.5-7.5 percent.”

Meanwhile, ADB on Tuesday also raised its GDP growth forecast for developing Asia – which is made up of 45 countries in the Asia-Pacific region – to 5.9 percent in 2017 and 5.8 percent in 2018.
That's up from the ADB's earlier prediction of 5.7 percent growth for each of those two years.

“Growth prospects for developing Asia are looking up, bolstered by a revival in world trade and strong momentum in the PRC (People’s Republic of China),” ADB Chief Economist Yasuyuki Sawada said.

“Countries in developing Asia should take advantage of favorable short-term economic prospects to implement productivity-enhancing reforms, invest in badly needed infrastructure, and maintain sound macroeconomic management to help increase their long-term growth potential,” he added.