MANILA – The Asian Development Bank (ADB) has again raised its economic growth outlook for the Philippines this year and in 2018 over accelerating infrastructure spending and robust consumption.
The regional lender in its December Asian Development Outlook Supplement now expects the country’s gross domestic product (GDP) growth to average 6.7% this year and 6.8% next year, from 6.5% and 6.7% estimates in its September Asian Development Outlook 2017 Update.
This was the fourth upgrade for 2017 since the lender’s first 6.1% projection in its March 2016Asian Development Outlook (ADO).
The latest 2018 forecast, on the other hand, was the second hike since a 6.6% estimate made in the April 2017 ADO.
“This outlook assumes that growth in the government’s infrastructure program will accelerate, supported by improvements in budget execution, with more large investment projects under way,” the report read.
If ADB’s forecast were realized, it would be slightly slower than the actual 6.9% GDP growth clocked in 2016. Actual economic growth averaged 6.7% in the nine months to September.
ADB’s projection for Philippine growth this year matches those for India and Vietnam, placing second to China’s 6.8% among Asia’s major economies.
The Philippines is also expected to outpace Southeast Asia’s projected 5.2% and the 6.0% forecast this year for “developing Asia” that consists of 45 of ADB’s 67 members covered by the report.
ADB’s forecast is higher than the 6.6% projection of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), International Monetary Fund (IMF), World Bank and Organization for Economic Cooperation and Development (OECD).
Next year, IMF and World Bank see the country growing 6.7%, while ESCAP has projected 6.8%.
The government has set 6.5-7.5% and 7-8% targets for this year and for 2018, respectively.
ADB noted that “the government is on track to achieve its target of spending 5.3% of GDP on public infrastructure this year.”
The January-October period saw disbursements on infrastructure and other capital outlays grow 11.8% to P442.7 billion from P395.8 billion in 2016’s comparable 10 months.
ADB also retained its inflation projections for the Philippines at 3.2% this year and 3.5% in 2018.
Headline inflation settled at 3.3% in the 11 months to November, matching the BSP’s full-year forecast and keeping within its 2-4% target band.