World Bank retains below-target forecast for Philippine economy

MANILA, Philippines — The World Bank has kept its growth forecast for the Philippine economy that, if realized, will fall below the government’s target for the next few years.

In its latest outlook report published Tuesday, the Bank said that in 2018 and 2019, the Philippine economy will likely expand 6.7 percent—flat from the actual full-year growth rate chalked up in 2017—before moderating to 6.6 percent in 2020.

The Washington-based multilateral lender’s projections fall below the Philippine government’s 7-8 percent goal set for 2018 until the end of President Rodrigo Duterte's six-year term.

“The Philippines will continue to be the fastest-growing economy in the Association of Southeast Asian Nations, despite some stabilization of investment growth,” the Bank said.

“Growth in Vietnam and the Philippines remains robust, but high capacity use rates may limit further expansion,” it added.

To supercharge economic growth, the Duterte administration plans to spend more than P8 trillion to upgrade the nation’s dilapidated infrastructure and aging ports.

Amid double-digit credit growth that has fueled concern of overheating, the Philippine economy grew 6.8 percent in the first quarter, faster than the 6.5 percent in the preceding three months and the 6.4 percent recorded in the comparable period last year.

Philippine Economic Planning Secretary Ernesto Pernia had said the country’s economy would have grown within target in the first three months of 2018 were it not for “spoiler” inflation, which hit a new five-year high of 4.6 percent in May.

Fade

The World Bank earlier said any growth above 6.7 percent would require vigorous investment in physical and human capital to push the Philippine economy “beyond its current potential output.”

The multilateral lender had also pointed out that investment growth in the Philippines hinges on the Duterte government’s ability to effectively and timely implement its ambitious public investment program.

But in its new report, the Bank said a surge in public investments in the Philippines is expected to “fade.”

“Investment growth declined from earlier record-high rates in the Philippines, as front-loaded investment spending eased,” it said.

Meanwhile, global economic growth will remain robust at 3.1 percent in 2018 before slowing gradually over the next two years, as advanced-economy growth decelerates, the Bank said.