THE UNITED NATIONS’ (UN) regional development arm maintained its economic growth forecast for the Philippines this year, amid a stable outlook for the Asia-Pacific region.
In its Economic and Social Survey of Asia and the Pacific 2018 report, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said it expects the Philippine economy to grow 6.8% this year, steady from its December report. It also forecasts the economy to grow by 6.9% in 2019.
This would be faster than the 6.7% gross domestic product (GDP) growth recorded in 2017, but below the government’s 7-8% target for 2018 until 2022. The World Bank and International Monetary Fund see lower 6.7% GDP growth for the Philippines this year, with the former forecasting it to grow the same pace in 2019.
ESCAP’s Philippine economic growth forecast would also be above Southeast Asia’s average of 5.1% and 5.2% for 2018 and 2019, respectively, as well as developing Asia-Pacific’s 5.5% forecast for both years.
“The outlook for economic growth in the Asia-Pacific region in 2018 and 2019 is looking broadly stable. Improved global economic prospects, a broad-based pickup in exports and robust domestic consumption support this positive economic outlook. Developing Asia-Pacific economies are projected to grow by 5.5% in both 2018 and 2019, with a slight moderation in China offset by a recovery in India and steady performance in the rest of the region,” the report read.
Among Southeast Asian countries, Myanmar is seen to grow at the fastest clip — 7.2% this year and 7.4% in 2019, followed by Cambodia — 6.9% this year and 6.8% in 2019.
ESCAP sees China’s economy growing by 6.6% this year and 6.4% in 2019, and India’s economy growing by 7.2% this year and 7.4% in 2019.
However, ESCAP flagged several risks facing the region, such as “growing financial vulnerability and rising private and corporate debt, particularly in China and countries in South-East Asia, falling or low reserves in a few South Asian economies and uncertainty concerning trends in commodity prices.”
“Our policy simulation for 18 countries suggests that a $10 rise in the price of oil per barrel would dampen GDP growth by 0.14 — 0.4 percentage points, widen external current account deficits by 0.5 -1.0 percentage points and build inflationary pressures in oil-importing economies. Oil exporters, however, would see a positive impact,” the report read.
Despite a rebound in trade last year, ESCAP also flagged rising trade protectionism, saying this remains a “threat to global economic stabilization.”
“Uncertainty and more trade protectionism may negatively affect some of the region’s traditional strengths, such as open export-oriented markets,” the report read. — Elijah Joseph C. Tubayan

THE PHILIPPINES’ manufacturing activity improved last month but tied with Vietnam to take the second rank below Myanmar, according to an IHS Markit survey conducted for Nikkei.
The country logged a 52.7 Purchasing Managers Index (PMI) in April, a “solid increase” from the 51.5 recorded in March, to tie with Vietnam.
It was also above the 51 PMI average of seven select Association of Southeast Asian Nations (ASEAN) member-states, which was the highest level in a year, from 50.1 in the previous month.
Myanmar however had the highest reading that month at a “sharp increase” to 55.5. Both Indonesia and Singapore meanwhile saw a “modest increase” to 51.6 and 51.1 to rank third and fourth, respectively.
This was followed by Thailand’s 49.5 reading, a “marginal” decrease from the previous month, and Malaysia’s “modest decrease” to 48.6.

A PMI reading above 50 suggests improvement in business conditions compared to the previous month, while a score below that signals deterioration.
The manufacturing PMI is composed of five sub-indices, with new orders weighing 30%, followed by output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).
“Faster rises in new orders and output, and a renewed increase in employment, all boosted the headline index. However, inventories of inputs continued to decline,” the report read.
It said both Vietnam and the Philippines saw “faster improvements in operating conditions.”
However, it noted that Philippine manufacturers faced higher costs, which led them to raise their selling prices “to help protect profit margins, with the country registering the steepest rate of charge inflation.
The economy saw a 4.5% headline inflation rate last month, the fastest pace in over five years, Philippine Statistics Authority data showed, with the four-month average at 4.1%.
Nikkei’s Philippine PMI report for April released last week showed manufacturers paid higher prices for fuel, industrial metal, sugar, and paper due to a weaker peso-dollar exchange rate and the new excise taxes introduced in January.
Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion (TRAIN) — reduced personal income taxes and estate and donors tax rates, but removed some value-added tax exemptions; hiked excise tax rates for automobiles, minerals, tobacco and fuel; as well as imposed new excise levies on sugar-sweetened beverages, among others.
IHS Markit Principal Economist Bernard Aw said although faster rises in output and new orders boosted the ASEAN manufacturing sector, “demand needs to grow at a faster rate before stronger growth can take root.”
“First, sales are not increasing fast enough to test the capacity of manufacturers across the region. Backlogs of work continued to fall, which weighed on hiring, suggesting that future job creation may be limited. Second, firms remained cautious about inventory management despite the pick-up in orders. Inventories of both inputs and finished goods continued to be depleted. Third, while business confidence remained positive, optimism was among the lowest in the survey history,” he said.
The Philippine report however noted that factory activity saw faster rises in both output and new orders in the local and foreign front, and that business optimism “remained high.” — E.J.C. Tubayan