MANILA, Philippines – The Asian Development Bank (ADB) upgraded its prediction of the Philippines’ full-year growth for 2016, due to stronger-than-expected results earlier this year and despite sluggish growth elsewhere in the world.
In a supplement to its Asian Development Outlook 2016 Update report released on Tuesday, December 13, the multilateral institution upgraded the country’s full-year gross domestic product (GDP) forecast to 6.8% from the previous forecast of 6.4% announced last September.
The ADB cited “robust domestic demand across the economy which spurred stronger-than-expected GDP growth at 7.0% year-on-year in the first 3 quarters.”
It noted in the report that the biggest contributor to growth from the demand side was investment, both public and private, partly supported by election-related spending ahead of national polls in May. Net exports dragged on growth, though only to a lesser extent in the 3rd quarter as it improved.
The ADB also raised the Philippines’ 2017 growth rate forecast from 6.2% to 6.4%.
“Such brisk growth is expected to ease as the impact of spending for the May elections fades, and in light of global economic uncertainties,” the ADB said. “In 2017, domestic demand will continue to underpin economic growth.”
The forecast, the ADB added, assumes that more investments will come amid efforts to upgrade public infrastructure and improve the business environment.
Asia downgraded this year
The Philippines’ brighter outlook stood in contrast to growth prospects for Asia as a whole this year, which the ADB downgraded from 5.7% to 5.6%. For 2017, the growth projection for Asia stayed unchanged at 5.7%.
Despite the lower 2016 projection, ADB deputy chief economist Juzhong Zhuang said: “Asian economies continue their robust expansion in the face of global economic uncertainties. Structural reforms to boost productivity, improve investment climate, and support domestic demand can help maintain growth momentum into the future.”
Stellar performances by the Philippines and Malaysia were offset by weaker-than-expected results in Singapore, Brunei, and Myanmar. The ADB maintained its forecast for Southeast Asia at 4.5% in 2016 and 4.6% in 2017.
The forecast for East Asia also remained unchanged at 5.8% in 2016, with a slight moderation to 5.6% in 2017. The region’s dominant player, China, is expected to grow by 6.6% this year and 6.4% in 2017.
The outlook in Central Asia was kept at 1.5% in 2016 and 2.6% in 2017, as the ongoing recession in Russia and low global commodity prices for oil and natural gas continue to dampen growth in the subregion.
South Asia, meanwhile, was downgraded from 6.9% to 6.6% this year. This is largely due to the lower projection for India, which is expected to grow only 7.0% instead of the previous 7.4%, due to weak investments, an agriculture slowdown, and the lack of available cash following the government’s decision to ban high-denomination banknotes. – Rappler.com
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