World Bank keeps below-target forecast for Philippine economy

MANILA, Philippines — The World Bank on Friday retained its growth projections for the Philippine economy that, if realized, will miss the government’s target.

In a statement, World Bank said that in 2018 and 2019, the Philippine economy will likely expand 6.7 percent—flat from the actual full-year growth rate chalked up in 2017—despite "rising global uncertainty."

The Washington-based multilateral lender’s projections fall below the Philippine government’s 7-8 percent goal set for 2018 until the end of President Rodrigo Duterte's six-year term.

“The government’s ability to carry out its investment spending agenda will determine if the Philippines can achieve its growth target of 6.5-7.5 percent over the medium term,” said Birgit Hansl, World Bank lead economist for the Philippines.

“In addition, higher private investment levels will be critical to sustain the economy’s growth momentum as capacity constraints become more binding,” Hansl added.

To supercharge economic growth, the Duterte administration plans to spend more than P8 trillion to upgrade the nation’s dilapidated infrastructure and aging ports.

In the first quarter of 2018, the Philippines remained one of the best performing economies in the region after it grew 6.8 percent, faster than the preceding three month’s 6.5 percent and the 6.4 percent pace in the comparable period last year.

However, the first quarter economic growth figure fell below the government’s target band, which Socioeconomic Planning Secretary Ernesto Pernia attributed to “spoiler” inflation.

“Given recent fiscal trends, government consumption growth was revised upwards, while private consumption growth is expected to expand at 5.9 percent in 2018 and 6.2 percent in 2019,” World Bank said.

“Investment growth was slightly upgraded due to higher public capital outlays, including increased infrastructure spending. Overall, it is anticipated that real [gross domestic product] growth will increase towards the end of 2018 and into the first half of 2019 with higher election-related public spending,” it added.

According to World Bank, exports are projected to moderate in the coming years as global growth is expected to decelerate. Exports slumped for the fifth straight month in May.

“Uncertainty around global growth conditions has risen, with the possibility of trade and other policy shocks emerging from major economies,” the World Bank said.