MANILA, Philippines – The World Bank lowered its growth forecast for the Philippine economy in 2017 to 6.8%, after it saw signs of slow public spending in the first 3 months of the year.
The bank, however, pointed out the high base in the first quarter of 2016, when large election-related spending boosted growth.
The latest edition of the World Bank Philippine Economic Update showed its trimmed outlook for the country, down from the 6.9% forecast released last April.
The bank’s forecast for 2018 remains unchanged at 6.9%.
Brigit Hansl, World Bank lead economist for the Philippines, said higher investment levels are important to sustain the economy’s growth momentum in the medium term.
“The government’s ability to realize its infrastructure spending agenda will determine if the Philippines can achieve the growth target of 6.5% to 7.5% for 2017,” Hansl added.
Despite a recovery in agriculture and robust growth in exports, the country’s gross domestic product (GDP) grew slower to 6.4% in the first 3 months of 2017, a decline from the 6.6% growth during the 4th quarter of 2016 and 6.8% in the 1st quarter of 2016, data from the Philippine Statistics Authority (PSA) showed.
Maintaining consumption growth
“The prospect of maintaining consumption growth at current levels over the medium term is supported by robust remittance flows. Remittances increased by 8% in the first quarter of 2017, compared to 3% in the first quarter of 2016,” the World Bank said.
For the World Bank, continued economic growth is seen to lead to more jobs and increased revenues across income groups.
“Between 2012 and 2015, household income among the bottom 40% of the income distribution rose by an average annual rate of 7.6%,” it added.
The World Bank’s June 2017 Global Economic Prospects showed global economic activity and trade are gradually improving, as robust growth among the country’s main trading partners is expected to boost demand for Philippine exports.
Meanwhile, Moody’s Investors Service recently affirmed the country’s Baa2 long-term issuer and senior unsecured debt ratings and maintained the outlook at stable as it expects that the “Philippines’ economic performance will remain strong.” – Rappler.com