The World Bank has revised its forecast for Philippine full-year economic growth in 2017 to 6.8 percent, slightly down from the 6.9 percent announced three months ago, to take in to account recent economic trends.
Even then, the multilateral lender said the downward revision meant a “continued robust growth” as it maintained the projection for 2018 growth at 6.9 percent.
The World Bank said government consumption and investment growth “somewhat weakened” recently following a similar path in pubic spending during the first quarter even if exports and private consumption kept a strong showing.
Birgit Hansl, the World Bank’s lead economist for the Philippines, said supporting higher investment levels would be critical in the next few years if the country were to sustain its growth momentum.
“The government’s ability to realize its infrastructure spending agenda will determine if the Philippines can achieve the growth target of 6.5 percent to 7.5 percent for 2017,” Hansl said in a statement.
According to the World Bank, continued expansion for the Philippines is expected to lead to increased job opportunities considering that sustained economic growth “has already begun to contribute to increasing incomes across all income groups.”
The bank observed that between 2012 and 2015, income among the poorest two-fifths of all households in the Philippines increased by 7.6 percent annually.
This year, the World Bank anticipates consumption growing stably at 5.6 percent and revving up to 6.1 percent in 2018.
Such prospects remain propped up by strong remittance flows, the growth of which almost trebled to 8 percent in the first quarter of 2017 from 3 percent in the same period of 2016, the bank added.
As global economic activity and trade are gradually improving according to the June 2017 Global Economic Prospects released by the World Bank, robust growth among the country’s main trading partners is expected to boost demand for Philippine exports, it added.
Finance Secretary Carlos Dominguez III last week dispelled concerns expressed by a few observers such as those from Moody’s Investor Service and Singapore-based DBS Bank that the Philippine economy might be overheating.
“There is ample evidence that the economy is far from overheating,” Dominguez said in a press briefing.
“For one, growth is only at 6.4 percent [in the first quarter, which is] slightly below our target, while inflation is declining at 3.1 percent in May from 3.4 percent in April,” he said.
The finance chief added that the fiscal deficit was only 2.3 percent of gross domestic product as of May. “I don’t thing there is really much a danger in over heating,” he said.