ADB exec counters WB: PHL economy won't overheat, to grow faster

Manila-based multilateral lender Asian Development Bank (ADB) has reaffirmed its view that the Philippines' economy will grow faster in the years ahead due to rising manufacturing and other investments.

ADB director-general for Southeast Asia Ramesh Subramaniam said the country's rising labor productivity and investments in manufacturing and technology are building up the economy’s productive capacity.

“This means, there’s even further room for the Philippine economy to grow,” Subramaniam said in a media briefing during the 51st ADB Annual Meeting in Pasig City.

The ADB director for Southeast Asia said the multilateral lender does not see "any material risk of overheating for the Philippines," even as it has become one of the fastest growing economies in Asia in recent years.

World Bank's lead economist Birgit Hansl said last month that the Philippines' economy is at risk of overheating.

Subramaniam said rising investments are sufficiently meeting robust domestic demand, thus helping keep inflation relatively manageable.

Based on ADB’s latest forecasts, the Philippine economy will grow by 6.8 percent this year and 6.9 in 2019, up from 6.7 percent in 2017.

The government expects the Philippines to hit upper middle income status by 2019 and to slash poverty by about a third to only 14 percent by 2022.

Growth drivers include rising private-sector investments, government infrastructure spending, and household consumption.

Subramaniam said the ADB is keen on adapting to the changing financing needs of member economies, including those that are reaching higher income levels like the Philippines.

The ADB has earlier expressed support to the Philippines’ ambitious infrastructure program - “Build Build Build” - in which the government will spend about $160 billion on vital public infrastructure all over the country.

This will be financed by a mixture of tax revenues and borrowings, including official development assistance, which offers interest rates much lower than commercial rates.

Among the recently announced infrastructure financing from the ADB is a $380-million loan for 280 kilometers of national roads and bridges in Mindanao. —ALG, GMA News