ADB cuts 2014 PH growth forecast to 6%
In its latest report, the regional lender reduces the growth forecast due to the country's laggard economic performance in the first 9 months of 2014
In its latest supplemental report, the regional lender slashes the growth forecast to 6% from 6.1% due to laggard performance in the first 9 months of the yea. File photo by EPA

MANILA, Philippines – Following the country’s sluggish 5.3% economic growth for the January-September period, the Asian Development Bank (ADB) slashed its  2014 performance forecast for the Philippines by 0.2 percentage points to 6%, the regional lender said in its latest Asian Development Outlook supplement report for December.

ADB previously projected that Philippine growth would slow down to 6.4% in 2014 and 6.7% in 2015 from 7.2% in 2013.

The forecasts are below the Aquino government’s targets of 6.5%-7.5% for 2014 and 7%-8% for 2015.

Despite robust private consumption, higher private investment, and net exports, weak public spending prevailed, contributing to the dismal GDP growth that only hit 5.3% for the first 3 quarters of 2014, thus, prompting ADB to slash its growth forecast for the country.

Despite the latest cut, the Manila-based lender said on Wednesday, December 17, that it is maintaining its 6.4%-growth forecast for the country in 2015.

“Continued strong household consumption bolstered by steady growth in remittances and increases in domestic employment will, along with improved government spending, support a pickup in growth next year,” ADB said.

Losing momentum

ADB also observed “lost momentum” in developing Asia for the second half of 2014, but still roughly in line with the earlier projections it had made.

To date, ADB sees the region expanding by 6.1% in 2014, and a slight uptick to 6.2% in 2015.

Developing Asia, comprising the 45 ADB developing member countries, grew 6.1% in 2013.

“While growth in the first 3 quarters of this year were somewhat softer than we had expected, declining oil prices may mean an upside surprise in 2015 as most economies are oil importers,” ADB chief economist Shang-Jin Wei said.

Moderated growth was also noted in the People’s Republic of China (PROC). “But the economy should still expand by 7.4% in 2014, or 0.1 percentage points off of the earlier forecast, and by 7.2% in 2015,” ADB said.

East Asia is now forecast to grow by 6.6% in 2014, and 6.5% in 2015.

Also, expectations remain high for reform-driven growth in India. ADB maintains its earlier forecasts for growth at 5.5% in fiscal year 2014 and 6.3% in 2015.

The outlook for South Asia as a whole is unchanged at 5.4% expansion in 2014, picking up to 6.1% in 2015, ADB said.

Apart from the Philippines, growth in several large Southeast Asian economies also disappointed in the first 9 months of 2014, prompting slight reductions in projections for Indonesia, Singapore, and Thailand. Sub-regional growth is expected to reach 4.4% in 2014, and 5.2% in 2015.

ADB moted that “economic malaise” in the Russian Federation is crimping remittances and trade in Central Asia, even as falling oil prices hurt the sub-region’s energy producers. Thus, growth is now expected at 5.1% in 2014, and 5.4% in 2015, revised downward by 0.5 percentage points for each year.

Also, ADB said that several governments have taken advantage of sharply lower global oil prices to rein in costly fuel subsidies, thus offsetting their mitigation of inflation.

But still, inflation in developing Asia is expected to be somewhat lower than previously forecast at 3.2% in 2014 and 3.5% in 2015, ADB said. –