ADB raises growth forecasts for PH until 2017

The Asian Development Bank (ADB) has raised its 2016 and 2017 growth forecasts for the Philippines amid expectations that economic reforms and infrastructure buildup will be sustained in the near term.

The ADB’s December 2016 Asian Development Outlook Supplement report released Tuesday showed that the Manila-based multilateral lender raised to 6.8 percent from 6.4 percent its gross domestic product (GDP) growth projection for the Philippines for this year.

The government targets full-year growth of 6-7 percent.

The ADB trimmed its economic growth forecast this year for developing Asia to 5.6 percent. It said East Asia as a whole is seen to expand by 5.8 percent this year and 5.6 percent in 2017 as growth stabilizes in line with earlier forecasts. The report added that regional giant China is on course to grow 6.6 percent this year and 6.4 percent in 2017.

“In the Philippines, robust domestic demand across the economy spurred stronger-than-expected GDP growth at 7 percent year-on-year in the first three quarters. The biggest contributor to growth from the demand side was investment, both public and private. Domestic demand was partly supported by election-related spending ahead of national polls in May,” offsetting the drag on growth of weak net exports during the first half, the ADB noted.

Also, the ADB said that “on the supply side, service expansion at 7.6 percent and manufacturing expansion at 7 percent together contributed nearly 90 percent of the total growth.”

“Construction also grew on higher investment in public and private projects alike. Agriculture contracted largely because of unfavorable weather but managed to post a modest rebound in the third quarter,” the ADB added.

Moving forward, the ADB said it expects “such brisk growth … to ease as the impact of spending for the May elections fades and in light of global economic uncertainties.”

As for 2017, the ADB also jacked up its GDP growth forecast to 6.4 percent from 6.2 percent previously.

The government was targeting 6.5-7.5 percent growth next year.

“In 2017, domestic demand will continue to underpin economic growth. This outlook assumes that investments will continue to be expanded on efforts to upgrade public infrastructure and improve the business environment,” according to the ADB.