Philippines capable of over 6.5% growth — S&P

MANILA, Philippines — A higher economic growth is easily achievable for the Philippines as the national government ramps up infrastructure spending over the next few years, according to S&P Global Ratings.

Vincent Conti, economist for Asia-Pacific at S&P, said the country may post a 6.5 percent or higher gross domestic product (GDP) growth over the next two years.

“Growth-wise in the Philippines in the past two years has actually been stellar. And in terms of the outlook for the next two years, we think that 6.5 percent and above as a pace of growth is actually very easily achievable,” Conti said.

Economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) expect a GDP growth for the Philippines of between seven and eight percent for this year from 6.7 percent last year.

“Overall, growth outlook in the Philippines is pretty strong,” Conti said.

The economist cited the favorable demographic trends in the Philippines, as well as the Duterte administration’s massive infrastructure build up.

“The policy, at least from the economic side, seems to be very stable and tends to have a lot of continuity across admin. I’m talking about the fiscal side and monetary side. A lot of positives from the economic policy as well,” he said.

The Duterte administration has earmarked at least P8.4 trillion for various infrastructure projects until 2022 as part of the country’s massive infrastructure build up.

“The ramping up of infra program is one of the relatively newer additions to the policy toolkit and that’s actually a positive in that it can generate even further potential growth farther into the future,” Conti said.

S&P senior director Kim Eng Tan said the S&P is upbeat about the policy environment in the Philippines.

“One reason why the outlook for the economy is so strong is because of the confidence that investors have in the policy framework,” Tan said.

Tan cited the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“For instance, we have for the first time in quite a number of years some degree of tax reforms are being carried out in the Philippines. And this is expected to go on over the remaining years of the administration which would serve to, some extent, stabilize the government’s revenue and hopefully provide more funds for infrastructure,” Tan said.