Infra, consumer spending to drive economic growth

CEBU, Philippines — Increased infrastructure spending and the robust consumption are seen to drive the domestic economy this year, an economist said.

In a recent investment outlook forum in Cebu City, Minda Olonan, head of research at Maybank ATR Kim Eng Securities, said consumer spending and the government’s infrastructure buildup are projected to support growth this year.

"The centerpiece of the government's economic policy is the massive infrastructure investments," Olonan said.

The government plans to spend as much as P8.1 trillion in infrastructure expenditure up to 2022.

Olonan said: "2018 will be about execution infrastructure projects."

Over the medium-term, she believes the massive infrastructure buildup is key to "lynchpin" the Philippines' growth.

"Stable consumption spending, resurgence of government spending and the current positive momentum in external demand (will support growth)," Olonan said.

While the growth structure of the Philippine economy remains intact, she it has become "less resilient" to external headwinds.

"With the prospect of current account deficit, risk of rising budget deficit alongside political risks make the economy and peso less resilient to weather external headwinds," she said.

The Philippine economy grew by 6.7 percent in the first three quarters of 2017, remaining aa one of the fastest-growing economies in Asia.

The government is scheduled to release the full-year 2017 economic growth data on Jan. 25.

The country had seen robust domestic consumption, government spending, and a recovery in external demand.

The country’s economic managers were confident the country is well on the way to reaching its full-year growth target of 6.5-7.5 percent.

The Asian Development Bank projects a full-year growth of 6.7 percent vis-à-vis Vietnam’s 6.5 percent, China’s 6.4 percent, and India’s 7.4 percent.

The Philippines' macroeconomic fundamentals remain firm and stable. Inflation has been kept within target and trade continues to grow. While underemployment rate also declined to its lowest level in 10 years.  (FREEMAN)