ADB cuts growth forecast on Philippines as budget delay, weak external outlook bite
MANILA, Philippines — The Asian Development Bank on Wednesday slashed its growth outlook on the Philippine economy as the delayed passage of the 2019 budget crimped state spending in the first semester and as headwinds threaten the global economy.
In an update of its Asian Development Outlook report, the Manila-based multilateral lender downwardly revised its growth projection for the Philippines to 6.0% in 2019 and 6.2% in 2020, against its previous forecast of 6.4% for both years.
The ADB said its lower growth estimates for the country were due to slowdown in domestic investment in the first half after the budget delay disrupted public expenditure, particularly on infrastructure.
But the ADB said the anaemic disbursements should recover in the coming months as big-ticket infrastructure projects get underway.
“The recovery in public spending should also boost private consumption, which is currently well supported by steady overseas workers’ remittances, moderate inflation, and low unemployment,” ADB country director for the Philippines Kelly Bird said.
Gross domestic product — or the value of all finished goods and services produced in the country — grew 5.5% in the second quarter, softer than 5.6% clocked in the preceding three months.
Socioeconomic Planning chief Ernesto Pernia said the economy would have to grow by an average of 6.4% in the second half to hit the low-end of the state’s 6%-7% annual target.
Meanwhile, economic outlook on Developing Asia — or the 45 members of the ADB — has further dimmed and risks to the region’s economies are rising as trade and investment weaken, the ADB said.
In the same report, the ADB forecast the Developing Asia to grow 5.4% this year before nudging up to 5.5% in 2020.
“The PRC–US trade conflict could well persist into 2020 while major global economies may struggle even more than we currently anticipate. In Asia, weakening trade momentum and declining investment are the major concerns,” ADB chief economist Yasuyuki Sawada said.
“These are all issues that policymakers must monitor closely,” he added.
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