ADB hikes Phl growth forecast

MANILA, Philippines -  The Asian Development Bank (ADB) slightly raised its growth forecast for the Philippines to 6.5 percent from the 6.4 percent outlook in April as higher public investment, robust consumption and rising exports are seen to give the economy a boost.

In a supplement to its Asian Development Outlook 2017, the multilateral development bank also raised its growth forecast in 2018 to 6.7 percent from 6.6 percent made in April.

The domestic economy grew 6.4 percent in the first quarter of the year, moderating from 6.9 percent in the same period in 2016 in the absence of election-related spending that characterized the same quarter the previous year.

ADB said investment and consumption remain the key drivers of growth. By sector, services and manufacturing remain the major contributors to growth.

Merchandise exports have been steadily growing, although still not enough to outpace the growth in imports.

The bank also noted good prospects for the agriculture sector this year after its strong performance in the first quarter of the year, an indication it has recovered from the destructive effects of El Nino last year. The sector grew 4.9 percent in the first quarter, reversing several quarters of contraction.

ADB also sees sustained public spending growth this year in line with the government’s ambitious infrastructure development plan.

“The government is making progress in ramping up infrastructure investment. In addition, tax reform likely to be approved in the second half of 2017 will unleash purchasing power in 2018 through lower personal income tax,” the bank said.

ADB likewise upgraded its growth outlook for developing Asia from 5.7 percent to 5.9 percent in 2017 and from 5.7 percent to 5.8 percent in 2018 on the back of stronger-than-expected growth in export demand in the first quarter of the year. The smaller uptick in the 2018 rate reflects a cautious view on the sustainability of export growth.

“Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017,” said Yasuyuki Sawada, ADB’s chief economist. “Despite lingering uncertainties surrounding the strength of the global recovery, we feel that the region’s economies are well-placed to face potential shocks to the outlook.”

Growth forecast in East Asia was revised upwards from 5.8 percent to six percent this year and from 5.6 percent to 5.7 percent in 2018 on stronger-than-expected performances of China, South Korea, Taipei and Hong Kong in the first half of the year.

“Exports have responded to a pick up in demand from developed and developing economies alone, driven in part by the mild rebound in some commodity prices from their 2016 lows,” ADB said.

In Southeast Asia, growth outlook was retained at 4.8 percent for 2017 and five percent for 2018. Robust domestic demand, particularly private consumption and investment, will continue to support economies in the region.

“Higher public investment boosted first quarter growth in the Philippines and Thailand, while private investment was strong in Malaysia and Vietnam,” said the report.

“Exports rebounded in Indonesia, the Philippines, Malaysia and Vietnam,” it added.

Meanwhile, Socioeconomic Planning Secretary Ernesto Pernia said he is optimistic that the Philippines can exceed the ADB’s growth forecasts. 

“Well, 6.5 percent is the lower range of our target. Our target for this year is 6.5 to 7.5 percent. So that seems to be logical and…international agencies, international organizations, private or government, tend to be a bit more conservative than our government itself,” Pernia said in a press briefing yesterday at Malacañang. 

“We are setting higher targets because we want to exert more effort to achieve the targets,” he added.

For some lawmakers, a high middle-income economy by 2022 is achievable if all goes well for the administration’s efforts alongside the Filipinos’ overwhelming trust in President Duterte’s  ability to turn the economy around.

“The increase in the approval and trust ratings of all top four officials of the government and the top four key institutions is also an indication of the general positive outlook of the people towards the government under Mr. Duterte,” Camarines Sur Rep. L-Ray Villafuerte said. 

 “The President’s critics may abhor his brusqueness and his tough-talking ways, but they cannot deny that his style of governance is working and that people approve of it,” Villafuerte said, citing Duterte’s 82-percent approval rating.  – With Alexis Romero, Delon Porcalla