THE ASIAN DEVELOPMENT BANK (ADB) has scaled down its Philippine economic growth forecasts for 2019 and 2020 amid “a slowdown in the global economy and in domestic investment,” even as the country will remain among the fastest in Asia next to other major economies like China, India and Vietnam.
ADB slashed its projection anew for Philippine gross domestic product (GDP) to six percent this year from the already-downgraded 6.2% forecast in July, according to the Asian Development Outlook (ADO) Update released on Tuesday, from the 6.4% forecast in the April report.
If realized, the projected GDP growth for 2019 will hit the lower end of the government’s 6-7% target band, but will be slower than 2018’s 6.2%.
For next year, the regional lender also slashed its Philippine forecast to 6.2% from 6.4% previously.
The Philippines’ forecasts are faster than the projections for Southeast Asia of 4.5% this year (down from 4.9% previously) and 4.7% (from five percent) for 2020. Within Southeast Asia this year, Cambodia (seven percent), Vietnam (6.8%), Myanmar (6.6%) and Laos (6.2%) will outpace the Philippines.
Elsewhere in Asia, China is projected to grow by 6.2% (from 6.3% previously), while India’s economy will expand by 6.5% (from 7.2%).
“Economic growth is now seen to be slightly lower than foreseen in ADO 2019, reflecting a slowdown in the global economy and in domestic investment,” according to the report, which cited the “plateauing” of domestic investment due to contraction of state spending that was “held back” by late enactment of the 2019 budget, leaving new projects, especially infrastructure, unfunded for much of last semester, as well as the 45-day ban on public works ahead of the May 13 midterm elections.
At the same time, ADB said that economic growth should recover in the near term, with “domestic private consumption holding up well and accommodative fiscal and monetary policies…”
“Moderating growth is also seen to be accompanied by lower inflation and narrower current account deficits than forecast in ADO 2019,” it added.
Kelly Bird, ADB’s country director for the Philippines, said in a press conference that the “reasons why Philippine economic growth is resilient (are) it got very strong macroeconomic policy settings, lower inflation, with rather low national debt… and the policy setting in terms of central bank and fiscal setting are really sound.”
The report said that “[p]ublic and private investment should regain traction as new, larger infrastructure projects get under way,” noting that “[t]he government is mobilizing more revenue to support public investment, while at the same time keeping he fiscal deficit within its fiscal program… equal 3.2% of GDP.”
ADB also slashed its growth projection for “developing Asia” — consisting of 45 of ADB’s 68 members — to 5.4% from 5.7% for this year and to 5.5% from 5.6% for 2020, due largely to escalating US-China trade tensions, deteriorating growth of advanced economies and declining investment. — Beatrice M. Laforga