GDP seen to sustain strong 6.8% growth

MANILA, Philippines — ANZ Research said the Philippines may sustain a robust economic growth this year that has led to rising inflation as well as widening trade shortfall.

In its latest Asia economic outlook, ANZ expects a 6.8 percent growth for the Philippines this year, up from 6.7 percent last year.

“With growth expected to remain high at 6.8 percent in 2018, macro imbalances are likely to intensity in the Philippines,” it said.

This would make the Philippines one of the fastest growing economies in the region after China’s 6.9 percent and India’s 6.7 percent.

The Philippines has registered 77 quarters of uninterrupted growth as the GDP expansion accelerated to 6.8 percent in the first quarter from the revised 6.5 percent in the fourth quarter.

Economic managers penned a GDP growth of between seven and eight percent this year.

ANZ Research said the strong growth has resulted in persistent macro imbalances, the most noteworthy of which have been higher inflation and a wider trade deficit.

It added the most noteworthy impact of strong growth has been observed on the trade deficit that surged by 59 percent year on year in the first four months.

The government’s infrastructure program through the Build Build Build program continues to boost investment-related imports such as capital goods, iron, and steel.

Meanwhile, solid demand in the private sector has resulted in higher imports of consumer goods.

“By contrast, exports remain weak, with the Philippines the only country in the region to record negative export growth so far in 2018,” it said.

ANZ Research said the current account is seen drawing some support from steady remittance inflows as well as receipts from business process outsourcing (BPO) and tourism sectors.

“Strong growth momentum, together with other developments, including the lingering impact of tax reforms, elevated global crude oil prices and a weaker peso, have raised price pressures in the system,” it said.