The World Bank on Monday announced a cut in its economic growth forecast for the Philippines for both this year and the next, citing downside risks such as the reenacted budget and the El Niño phenomenon.
According to World Bank Senior Economist Rong Qian, the World Bank now expects the Philippine economy to grow at a slower pace of 6.4 percent in its latest Philippines Economic Update (PEU), from the 6.5 percent it announced in January.
"Our baseline assumption is that the budget is delayed and the reenacted budget will have an impact on investment," she told reporters at a press conference in Taguig City.
The Philippines is currently operating on a reenacted budget, given disagreements between the two chambers of Congress.
Socioeconomic Secretary Ernesto Pernia earlier this month said the reenacted budget until April 2019 would bring down the full-year gross domestic product to 6.1 to 6.3 percent, 4.9 to 5.1 percent if the budget is passed in August, and 4.2 to 4.9 percent with a full-year reenacted budget.
Qian likewise flagged El Niño as one of the downside risks to economic growth, as the Department of Agriculture (DA) on Sunday said damage to the agriculture has tripled from the government's initial figure to P4.35 billion.
At the same press conference, Qian said economic growth is now expected at a slower rate of 6.5 percent in 2020 from the 6.6 percent earlier forecast.
"External risks remain high, especially the global growth is expected to moderate in the next two years and that will have an impact for the export in the Philippines," said Qian.
Aside from this, Qian flagged the ongoing trade tensions between China and the United States, the world's biggest economies.
"Mainly the US and China trade dispute that's continued to create uncertainty in the global market... Contagion risk in other emerging economies," she said. — RSJ, GMA News