The multilateral lender projected that the country's gross domestic product (GDP) would grow at 6.4% in 2019, 10 basis points lower than its estimate released in December last year. It is also lower than its outlook of 6.7% released during the first half of 2018.
Under a reenacted budget, the World Bank said, the government cannot implement new programs and projects, thus affecting public investment. (READ: Remember those suffering from delayed 2019 budget – Briones)
World Bank economists also pointed out the threat of El Niño, which might reduce farm output and raise food prices.
"Higher private consumption due to lower inflation, steady growth of remittances, and election spending will fuel growth this year. Growth in public investment will be tempered in the first half of 2019 but is expected to recover in the second half of the year," said Mara Warwick, World Bank Country Director for Brunei, Malaysia, the Philippines, and Thailand.
As for external factors, the multilateral lender said that the potential escalation of the United States and China's trade war and weak demand for Philippine exports might affect economic growth.
Potential challenges stemming from a strengthening US dollar, and hikes in US interest rates that could raise borrowing costs for the country's infrastructure projects, were also mentioned in the World Bank report.
"In the short term, key priorities for sustaining the Philippines' rapid and more inclusive growth include prudently managing fiscal and current account balances and preserving consumer and business confidence," said World Bank Senior Economist Rong Qian.
In the long term, the report stated that the country needs to focus on raising investments in health, nutrition, education, and skills to speed up inclusive growth. – Rappler.com