The Asian Development Bank (ADB) has raised its growth forecasts for the Philippines for this year and next year on expectations that the Duterte administration’s massive infrastructure program will sustain robust economic expansion.
In the supplement to its Asian Development Outlook Update 2017 report released Wednesday, the Manila-based multilateral lender jacked up its gross domestic product (GDP) growth projection to 6.7 percent for 2017 and 6.8 percent for 2018 from 6.5 percent and 6.7 percent, respectively, previously.
“This outlook assumes that growth in the government’s infrastructure program will accelerate, supported by improvements in budget execution, with more large investment projects under way,” the ADB said in the report.
Across the region, “infrastructure investment continued to play important roles in Indonesia, the Philippines, and Thailand,” the ADB said.
The Duterte administration early this year unveiled the ambitious “Build, Build, Build” program aimed at ushering in “the golden age of infrastructure” after years of neglect.
Under “Build, Build, Build,” the government would roll out 75 flagship, “game-changing” infrastructure projects, with about half targeted to be finished within President Duterte’s term, alongside plans to spend up to P9 trillion on hard and modern infrastructure until 2022.
The ADB’s upgraded growth forecast for this year remained within the government’s 6.5-7.5 percent target range, but the revised 2018 projection was still below the 7 to 8-percent goal.
The ADB noted that “the Philippine economy expanded by 6.7 percent in the first three quarters of 2017 on accelerating investment and robust consumption.”
“Public expenditure accelerated, particularly for infrastructure. The government is on track to achieve its target of spending 5.3 percent of GDP on public infrastructure this year.
Meanwhile, household consumption remained strong despite moderating slightly from last year. Net exports turned positive in the first nine months, reversing a deficit in 2016,” the ADB noted.
“On the supply side, services generated nearly 60 percent of GDP growth, spurred largely by trade, business process outsourcing, finance, and real estate services. Manufacturing contributed about 30 percent of the expansion in GDP, with food processing a major contributor. Finally, agriculture recovered from a dry spell last year under El Niño,” the ADB further noted.