The World Bank expects the Philippines to sustain robust economic growth in the next three years even as public investments are seen slowing down.
“The Philippines will continue to be the fastest-growing economy in the Association of Southeast Asian Nations (Asean), despite some stabilization of investment growth,” the Washington-based multilateral lender said in its January 2018 Global Economic Prospects report released Wednesday morning (Philippine time).
The World Bank projected the Philippines’ gross domestic product (GDP) to grow 6.7 percent in 2018 and 2019, before slightly slowing to 6.5 percent in 2020.
The World Bank’s forecasts for the next three years were nonetheless below the government’s target range of 7-8 percent annual GDP growth from 2018 to 2022.
“In some Asean economies, such as Indonesia and the Philippines, supportive monetary policy had spurred investment and, hence, capital accumulation in the wake of the global financial crisis,” the World Bank said.
“Rapid capital accumulation has also reflected infrastructure upgrades. In the Philippines, improved macroeconomic policy management and the government’s public-private partnership initiative have boosted capital accumulation,” the lender added.
However, the World Bank sees a slowing pace of capital accumulation reducing potential growth in the East Asia and Pacific region.
“The steepest slowdowns in capital accumulation are expected in China, where policy efforts to rein in credit growth continue, and the Philippines, where a surge in public investment is expected to fade,” it said.
The World Bank said the Philippines could finance its sizeable infrastructure investment needs by raising additional revenues.
In December, the World Bank raised its 2017 growth forecast to 6.7 percent from the previous projection of 6.6 percent as part of its quarterly forecast exercise to reflect recent economic trends.
The revised 2017 forecast remained within the government target of 6.5-7.5 percent.
The government will announce the 2017 fourth-quarter and full-year GDP performance later this month.
The economy grew by an average of 6.7 percent in the first three quarters of last year.
“In the Philippines, growth decelerated slightly to a still-solid 6.7 percent as the impact of election-related spending in 2016 dissipated,” the World Bank noted in the report.