The Asian Development Bank (ADB) has revised upward its economic growth forecast for the Philippines this year and in 2018, as the country is expected to benefit from the government's infrastructure and tax reform initiatives.
"Growth forecasts are upgraded from 6.4 percent to 6.5 percent for 2017 and from 6.6 percent to 6.7 percent for 2018," the Manila-based ADB said in its Asian Development Outlook Supplement released Thursday.
The Philippine government is making progress in ramping up infrastructure investment, the multilateral lender noted.
"In addition, tax reform likely to be approved in the second half of 2017 will unleash purchasing power in 2018 through lower personal income tax," the ADB said.
In a separate briefing in Malacañang on Thursday, Socioeconomic Planning Secretary Ernesto Pernia said it was expected for ADB to stay on the conservative side of forecasting growth.
"Well, 6.5 percent is the lower range of our target. Our target for this year is 6.5 to 7.5 percent," Pernia said.
The ADB forecast seems logical as international agencies – private or government – tend to be more conservative than the Philippine government, the cabinet official noted.
The Philippine growth forecast this year is the highest in Southeast Asian, compared with Indonesia's 5.1 percent, Malaysia's 4.7 percent, Singapore's 2.4 percent, Thailand's 3.5 percent, and Vietnam's 6.5 percent.
The ADB's revised outlook falls within the Duterte administration's 6.5 to 7.5 percent growth target for 2017.
“The Philippine GDP grew by 6.4 percent in the first quarter of 2017, its moderation from 6.9 percent in the same period in 2016 partly reflecting a base effect from election spending last year," the ADB said.
"Investment and consumption were the key drivers of growth. Merchandise exports improved but not enough to offset imports," it added.
Services and manufacturing were major contributors to Philippine growth, the bank noted.
"Services generated nearly two-thirds of GDP growth, spurred largely by trade, business process outsourcing, and finance," it said.
"Manufacturing growth has remained robust. Agriculture output has recovered after being hit by a dry spell last year caused by El Niño," it added.
In Southeast Asia, the growth outlook remains at 4.8 percent for 2017 and 5.0 percent for 2018, with high growth projections for Malaysia, the Philippines, and Singapore.
However, it is dampened somewhat by disappointing growth in Brunei Darussalam, according to ADB.
"Robust domestic demand, particularly private consumption and investment, will continue to support economies in the region," it said.
"Higher public investment boosted first quarter growth in the Philippines and Thailand, while private investment was strong in Malaysia and Vietnam. Exports rebounded in Indonesia, the Philippines, Malaysia, and Vietnam," it added. — VDS, GMA News