World Bank retains Philippines growth forecast

MANILA, Philippines — The World Bank has retained its growth forecast for the Philippines at 6.4 percent this year and 6.5 percent throughout 2020 and 2021.

In its June 2019 Global Economic Prospects report titled “Heightened Tensions, Subdued Investment,” the World Bank noted that growth in commodity importing countries in the East Asia and Pacific region like the Philippines “remains robust but continues to moderate.”

The bank said this reflects weakening exports amid resilient domestic demand.

In April, the World Bank lowered its growth forecast for the Philippines to 6.4 percent in 2019 from the 6.5 percent estimate made in the January 2019 Global Economic Prospects report. Similarly, it lowered the growth expectations for 2020 to 6.5 percent from 6.6 percent previously. 

World Bank senior economist Rong Qian attributed the lower forecast to the delay in the passage of the 2019 national budget as well as the pre-election spending ban on new public construction project.

The effect of the El Niño weather phenomenon was also considered in the downgrade.

“In the Philippines, private consumption is rebounding amid slowing inflation and improving employment conditions. In addition, election-related spending in the first half of 2019 is giving the economy an additional boost and is partly mitigating the impact of weakening exports,” the World Bank said in the June report.

In its immediate neighborhood in East Asia and the Pacific region, growth is projected to slow from 6.3 percent in 2018 to 5.9 percent in 2019-20, and to ease further to 5.8 percent in 2021 to reflect the deceleration in China and the struggle of commodity exporting countries amid weaker global demand.

In commodity exporting countries like the Philippines, World Bank said growth could be expected to be subdued ,but would be propped up by domestic demand and the escalating trade war between US and China.

“Growth among commodity importers is expected to moderate in 2020-21, reflecting capacity constraints and subdued external demand. Domestic demand will continue benefiting from favorable financing conditions amid low inflation and rising capital flows (Cambodia, the Philippines, Thailand, Vietnam),” it said in the report.