Philippines to sustain growth amid global slowdown — World Bank

MANILA, Philippines — The Philippines is expected to sustain its current growth trajectory despite an expected slower growth in the global economy in the next few years, according to a new report by the World Bank.

In its 2019 Global Economic Prospects report, the international finance institution said the domestic economy likely grew by 6.4 percent in 2018 and is expected to grow by 6.5 percent in 2019.

This is in line with the downgraded projections made last month because of the delay in the passage of the 2019 national budget which can temper investment growth this year.

Last month, the World Bank said while high inflation may have tempered the growth in household consumption in the fourth quarter of 2018, a moderation in inflation in the following quarters is expected to boost consumer confidence and raise private consumption in 2019.

The mid-term election in May is also expected to strengthen consumption by temporarily raising employment and disposable incomes in early 2019.

In the new report, World Bank said the domestic economy is expected to grow by 6.6 percent in 2020 throughout 2021. The expectations for the Philippines is still above the average forecast in East Asia and the Pacific region of 6.3 percent in 2018, six percent throughout 2019 to 2020 and 5.8 percent for 2021.

Global economic growth is expected to soften from a downward revised three percent in 2018 to 2.9 percent in 2019 amid rising downside risks that include the softening of international trade and manufacturing activity, elevated trade tensions, rising borrowing costs and policy uncertainties.

Growth is expected to slow down further to 2.8 percent in 2020 to 2021.

In East Asia and the Pacific, the country’s immediate neighborhood, growth is expected to moderate to a still robust six percent in 2019 and 2020. Growth in the region is seen to have slowed to 6.3 percent in 2018.

Risks to regional growth include the possibility of further escalation of trade tensions and faster-than-expected tightening of global financing conditions.

 “Countries most vulnerable to disruptions in global trade and financial market activity are those with high debt, elevated current account deficits and high exposure to portfolio and bank inflows, and significant reliance on exports,” said the report.

The report said that despite the slowdown, the region remains one of the world’s fastest-growing regions and has been relatively resilient to recent bouts of financial market volatility.

This is because most countries continue to experience growth above the average of emerging and developing economies. These include China, Malaysia, Thailand, Philippines and Vietnam.