The economy expanded by a higher 6.9 percent last year, the government said Thursday, but rising prices of consumer goods pose risk to robust demand, such that the Asian Development Bank sees the country’s gross domestic product (GDP) growing by a slightly slower 6.4 percent this year.
In a statement, the Philippine Statistics Authority (PSA) said that while the 6.6-percent growth figure for the fourth quarter of 2016 was retained, the full-year GDP expansion was raised from 6.8 percent previously.
“The major contributors for the upward revision in 2016 were construction, mining and quarrying (sectors), and other services,” the PSA said.
In its Asian Development Outlook (ADO) 2017 report released also yesterday, the Manila-based ADB kept its 6.4-percent GDP growth projection for the Philippines for 2017, “reflecting in part the high base effect from last year’s figure but also rising commodity prices that could affect domestic demand,” the multilateral lender said.
The government targets a 6.5- to 7.5 -percent economic expansion this year.
Inflation in March rose to a 28-month high of 3.4 percent, in line with the Bangko Sentral ng Pilipinas’ expectations of monthly upticks in the rate of increase in the prices of basic goods until the third quarter before slowly decelerating to average at 2-4 percent by the end of the year.
The BSP forecasts inflation to hit 3.4 percent in 2017, up from 1.8 percent in 2016.
“Private consumption will continue to rise robustly, though at a moderate pace than last year. A central bank survey conducted in the first quarter of this year found consumers remaining optimistic, though expectations of higher inflation may temper the pace of spending. Similarly, investor sentiment remains broadly positive, but at the same time businesses expressed some caution arising from higher oil prices, Philippine peso depreciation, and uncertainty about global trade and monetary policies,” the ADO 2017 report read.
In a statement, the ADB was nonetheless optimistic of sustained robust economic growth in the near term, especially with the implementation of the Philippine Development Plan (PDP) 2017-2022, the Duterte administration’s six-year socioeconomic blueprint, in full swing.
The PDP 2017-2022 laid down the policy direction to be undertaken to achieve the goal of bringing down poverty incidence to 14 percent by 2022 from 21.6 percent in 2015.
“The Philippines is in a sweet spot for economic growth. The biggest contributor to growth is investment, both public and private, exceeding the growth contribution from consumption,” Richard Bolt, ADB country director for the Philippines, said.