PH seen to outperform Asean peers’ growth
Philippine economic growth would outperform those of its peers in the region this year on the back of robust domestic demand despite a weak global economy, according to the World Bank.
“Among the large developing Asean economies, Vietnam and the Philippines have the strongest growth prospects. In the Philippines, growth is projected to firm to 6.4 percent in 2016, with an accelerated implementation of public-private partnership projects and strong domestic demand. The country benefits from diversified export markets and low global commodity prices,” the World Bank said in its June 2016 Global Economic Prospects report released Wednesday in Manila.
The Washington-based multilateral lender kept its forecasts in April of a 6.4-percent gross domestic product (GDP) growth for the Philippines in 2016 and 6.2 percent in 2017 and 2018.
The World Bank’s growth projection for this year, however, was below the government’s 6.8-7.8 percent target range. Economic managers had said the lower end of the 2016 GDP growth goal was attainable given the faster-than-expected 6.9- percent expansion in the first quarter.
In the next two years, the Philippine economy would further grow on expectations of sustained low commodity prices and strong consumption, the World Bank said.
The World Bank noted that in recent years, economic growth in the country was being “bolstered by steady inflows of remittances and trade in services.”
Amid slow global trade, “strong domestic demand underlay growth in commodity importers” in the Philippines, the World Bank said.
The World Bank also noted of the country’s improved macroeconomic fundamentals. For one, “tighter macro-prudential policies in several of the larger regional economies (Malaysia, Thailand and the Philippines) have already resulted in moderating credit growth.”
Also, the World Bank cited higher revenue generation in recent years. “In the Philippines, fiscal deficits for the general government narrowed significantly, from 3.5 percent of GDP in 2010 to just under 1 percent in 2015, helped by strong revenue collection through faster growth and improved tax administration.”
The World Bank urged Asean countries, including the Philippines, to establish fiscal policy measures “within a medium-term framework to create fiscal space and improve public expenditure efficiency.”
“This can be achieved through improved revenue mobilization (in Cambodia, Indonesia, Laos and the Philippines), reduced dependence on fiscal revenue from energy sectors (in Malaysia, Mongolia and Papua New Guinea), and increased and more efficient investment (in Indonesia, the Philippines and Thailand),” the World Bank said.
The lender also urged the Philippines to tap the growth potentials being presented by its young population.