Economy forecast to grow by 7-8% starting next year

The Philippine economy could grow by 7-8 percent, the fastest since the Edsa Revolution, starting 2017 with the Duterte administration’s strong infrastructure spending program, an economist from University of Asia and the Pacific (UA&P) said.

“A 7- to 8-percent GDP growth with low inflation is doable for post-2016. Think that 2016 will prove most of the organizations wrong because most of them have been upgrading to 6.2 percent. We already got 6.9  [percent] in the first quarter. So for the second quarter, I assure you that it’s going to be robust,” explained economist Victor Abola of UA&P,  First Metro Investment Corp.’s (FMIC)  partner in its monthly research publication.

For the rest of the year, FMIC said it was confident the economy would maintain its steady growth, projecting GDP expansion of 6.5 to 7 percent amid global economic uncertainties.

Strong economic fundamentals, heightened election-related spending, increased domestic demand led by investments, steady consumer and government spending and overall high optimism on President Duterte’s leadership are expected to sustain GDP growth.

“The country is expected to continue its rapid growth, outperform its regional peers and weather any further global economic and financial market headwinds. The country’s fiscal position remains healthy and monetary policy that is supportive of growth is seen to persist even after the change in government leadership,” said FMIC president Rabboni Francis Arjonillo.

FMIC assistant vice president and research head Cristina Ulang also noted that GDP growth was way above 6 percent in the last four election years, which also saw an outperformance during the first quarters and sustainable growth during the second quarters.

Inflation is also expected to 2 to 2.2 percent due to the slight recovery of oil prices and the effects of the El Niño dry spell. Overseas Filipino Workers (OFW) remittances will also grew by 2-4 percent due to the impact of low oil prices. Exports are forecast to slightly increase by 2-5 percent but will still be affected by a weak global economy. Imports, however, are projected to grow 7-10 percent this year, driven by robust domestic consumption and high investment demand.