Philippines should remain as one of ‘growth leaders’ next year — Oxford Economics
MANILA, Philippines — The Philippines should remain as one of the “growth leaders” next year, Oxford Economics said, adding that the Southeast Asian nation is insulated from risks posed by persistent trade tension between the US and China that is threatening the global economy.
In a research note, analysts at Oxford Economics said it expects the Philippine economy to expand 6.3 percent in 2018. If realized, this would fall below the government’s downwardly revised 6.5 to 6.9 percent target for this year.
For 2019 and 2020, the think tank said the Philippines is forecast to grow at a slower pace of 6.1 and 5.7 percent, respectively. The Duterte administration has set a 7 to 8 percent goal for next year until 2022.
Oxford Economics said that in the Asia Pacific region, the Philippines and India are likely to be spared from the brunt of escalating trade war between the US and China, noting that the two countries have less trade links with Beijing.
“The small open economies are expected to experience the largest dip in growth, with Hong Kong and Singapore slowing more than China in 2019,” Oxford Economics said.
“The more inward-looking economies — India and the Philippines – should remain growth leaders,” it added.
The Trump administration last Wednesday renewed its accusations of “unfair” trade practices against China — which came as markets grow pessimistic that the world's two largest economies can resolve their burgeoning trade war any time soon.
US President Donald Trump has slapped tariffs on more than $250 billion in Chinese imports. China has retaliated by imposing tariffs on more than $100 billion in American goods that China buys.
“We expect the US-China trade war and the subsequent slowdown in Chinese demand to dominate the outlook for most Asia Pacific economies in 2019... especially in Hong Kong, Singapore, Taiwan, South Korea and Malaysia, where trade ties with China matter greatly,” it said.
“Eventually, some economies may benefit from the relocation of supply chains. South-east Asia could be a preferred destination,” it added.
In the third quarter, the Philippine economy slowed down to a three-year low of 6.1 percent, as surging borrowing costs and red-hot inflation weigh on consumer spending, which has traditionally been the driving force behind growth.
Socioeconomic Planning Secretary Ernesto Pernia said the Philippines would have expanded by 6.5-7 percent last quarter had soaring prices been controlled, adding that the state’s downgraded economic growth target for this year is now “much more challenging” to hit.
“Outlook for both [Philippines and India] has deteriorated over the last six months, as eroded investor confidence in twin-deficit economies has coincided with domestic turbulence – renewed financial sector stresses in India and rapidly rising inflation in Philippines,” Oxford Economics said.
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