'Philippines to miss growth targets in 2018 and 2019'

MANILA, Philippines — Sun Life of Canada (Philippines) Inc. expects the Philippines to miss its economic growth target for this year and next.

In an interview, Sun Life chief investments officer Michael Enriquez said his company adjusted its gross domestic product (GDP) growth forecast for the Philippines to 6.1 percent for 2018 and 6.4 percent for 2019, down from the previous estimates of 6.4 percent and 6.6 percent, respectively.

These are both below the government’s 6.5 to 6.9 percent target range for 2018, and the seven to eight percent target for 2019.

Enriquez said the projections were adjusted due to slower consumption figures as a result of high inflation in the first three quarters.

On the other hand, Enriquez said the government is projected to finally hit the lower range of its economic growth target by 2020, with GDP seen to expand by seven percent.

According to Enriquez, Sun Life has a more bullish outlook for 2020 as most of the government’s infrastructure projects are expected to start actual construction by then.

“There are a lot of actual projects that have been bided out, but actual construction won’t start until probably a year after. There is a lot of projects but the actual construction (translated) to real spending won’t actually happen until

The company official cited the Bulacan International Airport and the rehabilitation project for the Ninoy Aquino International Airport (NAIA), which he said have already been approved or bided out, but might take a while to start actual construction.

Meanwhile, Enriquez said inflation is expected to start slowing down for the rest of the year, with indications that it has already peaked in September.

“From the peak of 6.7 percent in September, we have been seeing inflation adjusting lower. Our expectation is about 6.3 percent for November, this is within consensus,” the company official said.

“And moreso, the important thing than that is the direction of inflation. We’re seeing inflation already slowing and in fact, probably has already peaked. This is a change from our previous forecast where we saw inflation worsening probably towards December,” he said.

He said inflation may have started easing mainly due to declining oil prices in the international market.

“And the other thing that’s crucial here is the government has already passed the Rice Tariffication Bill,” Enriquez added.

Due to these factors, Enriquez said inflation may finally normalize next year and settle within the government’s two to four percent target.