ADB: Philippine growth to slow down for the rest of 2016

CEBU, Philippines - Growth in the Philippine economy is expected to slow down for the rest of 2016 as the effect of pre-election spending wanes and global economic uncertainty persists, the Asian Development Bank said.

ADB's July Outlook Supplement noted that the multi-lateral lender has kept its 6 percent and 6.1 percent growth forecast for 2016 and 2017, respectively.

In the outlook report it released Monday, ADB underscored the strong economic growth in the first quarter at 6.9 percent.

"Election-related spending ahead of the May 2016 national elections helped drive the upbeat economic performance. Pre-election spending helped boost investment, household consumption, and government expenditure," ADB said.

ADB said strong growth in industry and services also fueled the "impressive" economic performance.

"Robust domestic consumption catalyzed construction and manufacturing. Private construction continued to grow, while public infrastructure spending strongly rebounded, rising by 39.9% in the first quarter," ADB further noted.

The government projects the Philippine economy to grow 6-7 percent this year and 6.5-7.5 percent next year.

The International Monetary Fund also has a 6 percent growth forecast for the country this year and 6.2 percent in 2017.

Inflation

In addition, ADB also cut is inflation forecast for the Philippines to 1.8 percent in 2016, a downward revision from its 2.3 percent initial outlook.

"The adjustment is in line with a lower-than-expected result in the first 5 months as the impact of El Niño on food prices was less severe than anticipated. Rice imports augmented domestic supplies, helping to ease price pressures," the Philippine-based development bank said.

ADB also revised its inflation forecast for 2017 slightly up to 2.8 percent in anticipation of higher gains in oil prices.

"Inflation is seen accelerating slightly in 2017 as both growth and energy prices firm up," it said. (FREEMAN)