PH seen to grow by 6.4% in ’16

The World Bank expects the Philippines to be among the fastest growing in East Asia and the Pacific in the near term, although the multilateral lender cautioned about relying too much on China’s slowing economy.

World Bank chief economist for the East Asia and Pacific region Sudhir Shetty told a video conference Wednesday that the Philippines and Vietnam had the strongest growth prospects in the region.

The World Bank forecasts the Philippine economy to grow by 6.4 percent in 2016, before tapering to 6.2 percent next year. The government targets a 6-to 7-percent growth this year, then pick up to 6.5 to 7.5 percent in 2017.

In its East Asia and Pacific Economic Update October 2016 report titled “Reducing Vulnerabilities,” the World Bank said second-half Philippine growth would be “anchored by robust domestic consumption and could receive additional support from sustained improvements in public spending.” Election-related spending buoyed first-half economic expansion to 6.9 percent.

Also, “the Philippines is expected to continue to benefit from strong private investment as purchases on durable equipment have been strong since the fourth quarter of 2015,” it added.

The World Bank, however, identified slower remittances, slower consumption due to higher food costs and lower net exports amid weak global demand as risks to economic growth.

Asked to comment about the Duterte administration’s pivot to China, Shetty pointed out that while the mainland was among the most “dominant” economies in the region, it was also being weighed down by an expected prolonged or sharper slowdown.

A slowing Chinese economy can impact on investment, trade as well as tourism across the region, he added.

When asked if President Duterte’s controversial statements against world leaders and trading partners such as the US and the EU could sour investor sentiment, Shetty said that so far, there were “not a lot” of evidence that foreign money was fleeing from the Philippines. “We don’t see it happening quite yet.”

Shetty nonetheless noted that “words matter when they continue to hold the headlines for long periods of time.”

For Shetty, what’s more important is that the Duterte administration had committed to address the country’s development needs as well as ramp up public investment, especially on infrastructure.

“There’s a lot of continuity relative to economic policies of the previous administration… We got to take it for what it’s worth and watch that,” he said.

Shetty also said the Department of Finance’s proposed tax policy reform program was a “good” and “sensible” measure.