ADB retains Philippines growth forecasts for 2018, 2019

MANILA, Philippines — The Asian Development Bank (ADB) retained its 6.4 percent growth forecast for the Philippines this year and 6.7 percent in 2019 on the back of strong infrastructure spending and still buoyant consumption despite rising prices.

Economic output assumptions contained in the supplement to its Asian Development Outlook (ADO) were unchanged from the ADO update in September, when growth projections were revised downward from initial expectations of 6.8 percent this year and 6.9 percent in 2019.

ADB noted that Philippine GDP growth remained strong at an average of 6.3 percent in the first three quarters of the year, although moderating from 6.8 percent in the same period last year.

Investment has so far been the biggest contributor to growth, having grown 16.7 percent in the first three quarters of the year, faster than the growth rate of 9.8 percent in the comparative period last year.

“Public and private construction growth quickened, as did investment in durable equipment. Growth in government spending also picked up on higher social service expenditure and on salary hikes for government workers,” said ADB in the ADO supplement.

Next year, GDP growth is expected to be fuelled by robust public and private investment, ADB.

ADB, however, hiked its inflation forecast for the Philippines this year to 5.3 percent from the September forecast of five percent. It retained its inflation growth expectation of four percent for 2019.

The country saw the growth in consumer prices moderate to six percent in November from a peak of 6.7 percent in October, for an average of 5.2 percent in the first 11 months of the year, well up from 2.9 percent last year.

Food prices rose sharply because of a combination of weak agricultural output, high oil prices early in the year and new excise taxes.

ADB said the buildup of inflationary pressure is expected to moderate next year as the tight monetary policy created by the successive rate hikes is expected to kick in.

On a regional context, growth forecast for developing Asia remain unchanged at six percent for 2018 and 5.8 percent in 2019 as the region is expected to weather external headwinds.

Softer international commodity prices and domestic factors such as monetary policy kept consumer prices in check regionally.