ADB slashes Philippine growth outlook
MANILA, Philippines — The Asian Development Bank on Wednesday slashed its growth forecasts for the Philippine economy in 2019, although strong domestic investment and consumption are expected to offset slowing global demand and possible farm losses due to the El Niño dry spell.
In its latest Asian Development Outlook report, the Manila-based multilateral lender cut its 2019 Philippine growth projection to 6.4 percent from 6.7 percent previously. For 2020, ADB expects the economy to expand at 6.4 percent as well.
If realized, ADB’s new growth estimate for the Philippines would be higher than 6.2 percent chalked up in 2018.
“The Philippine economy is on a healthy growth trajectory, with public and private investment sustaining strong growth for the economy this year and next,” said ADB country director for the Philippines Kelly Bird.
“The risks to the growth outlook are tilted on the downside, with rising local investments likely offsetting any impact from a faster-than-expected slowdown in the global economy,” Bird added.
According to ADB, inflation is expected to ease to 3.8 percent in 2019 and 3.5 percent in 2020 against 5.2 percent in 2018, as global oil prices moderate, food supply improves due to a new law liberalizing rice importation, and last year’s monetary tightening continues to work their way through the economy.
However, the lender flagged structural and policy impediments to agriculture growth.
“Agriculture has been underperforming for the past two decades, growing by an average of 1.5% annually from 2011 to 2018,” the ADB said in its report.
Latest estimates from the Department of Agriculture showed production inflicted by the El Niño dry spell to the farm sector stood at P5.05 billion as of April 2.
The drought has so far hit 164,672 farmers.
Although reports suggest a milder occurrence this year, economists say the El Niño dry spell remains a threat to the country’s inflation outlook.
On Monday, the World Bank also cut its Philippine growth forecasts for this year and next, citing, among others, the El Niño phenomenon that might reduce farm output and raise food prices.
READ: World Bank lowers Philippines growth outlook
Agriculture production has historically contributed about a tenth to gross domestic product and accounted for a fourth of employed persons.
Overall, the ADB also said in its new report that growth “remains strong” across most of developing Asia but is set to moderate this year and next against the backdrop of slowing global demand and persistent trade tensions. — Ian Nicolas Cigaral
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