YOKOHAMA, Japan—Despite a firebrand President Duterte setting off political explosives here and abroad, Manila-based Asian Development Bank (ADB) sees the Philippine economy sustaining its growth on strong consumer spending and vigorous contributions from both public and private sectors.
“Some political turbulence were a little bit worrisome but despite this situation, our growth rate forecast for the Philippines will continue,” Yasuyuki Sawada, ADB chief economist, told a press briefing ahead of the multilateral lender’s 50th annual meeting today.
In its Asian Development Outlook 2017 report released last month, the ADB maintained its 6.4-percent economic growth projection for the Philippines for this year, “reflecting in part the high base effect from last year’s figure but also rising commodity prices that could affect domestic demand.”
The gross domestic product (GDP) grew 6.9 percent in 2016, among the fastest in the region. The ADB’s forecast for 2017 is below the government’ 6.5-7.5 percent growth target.
The ADB had noted that private consumption accounted for almost 70 percent of the country’s GDP.
Moving forward, “domestic consumption and domestic investment are sound to support quite a robust growth rate in the Philippines,” Sawada said.
Sawada said the trend was the same across Asia—economies have become more reliant on domestic investment and consumption than on external demand as slow global economic growth has been dampening exports performance alongside protectionist policies looming in the horizon.
Sawada said free trade was “good for all countries,” hence the ADB would be leaning toward a more open trade regime.
For 2018, the ADB projected a Philippine GDP expansion of 6.6 percent, also lower than the government target range of 7-8 percent.
In its 2017 report, the ADB attributed its higher 2018 forecast to “government plans to further ramp up public infrastructure investment.”
“Services—including business process outsourcing and tourism—will remain a growth driver, while inflation will likely edge up but remain within the Bangko Sentral ng Pilipinas target of 2-4 percent,” it said.