Moody’s sees 6.7% GDP growth this year

MANILA, Philippines — Philippine economic growth may likely accelerate to 6.7 percent this year on the back of better public spending and improved global trade, according to Moody’s Analytics.

In a report, Moody’s Analytics said it expects the Philippine economy to grow by 6.7 percent this year, which is within the government’s 6.5 to 7.5 percent growth target.

“We forecast GDP growth to improve to 6.7 percent in 2020, supported by higher government spending and expected modest improvements in global demand,” Moody’s Analytics said.

The projected growth for 2020 is also faster than the 5.8 percent growth forecast for 2019.

“Growth in 2019 was weighed down by budget delays alongside subdued external conditions weighing on exports,” Moody’s Analytics said.

It added that economic expansion in the fourth quarter alone is expected to settle at 6.2 percent.

Earlier, Moody’s Investor Service senior vice president Christian De Guzman said government spending is expected to normalize this year. This, along with residual spending from the 2019 budget, is seen to support a significantly larger fiscal expansion in 2020.

He said growth would be supported by the timely passage of the 2020 national budge.

“Despite our expectation of a significant pickup in budgeted spending and a consequently wider fiscal deficit, we project underlying strengthening in Philippine fiscal metrics because of ongoing structural increases in revenue from tax reform,” de Guzman said.

He said the revenue would be enhanced this year by scheduled increases in excise taxes, some of which were part of the Duterte administration’s first package of tax reforms passed in 2017.

The economy expanded by 6.2 percent in the third quarter of last year, faster than the six percent recorded in the same quarter of 2018 and 5.5 percent in the previous quarter.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the country’s GDP likely expanded between 6.4 and 6.5 percent in the fourth quarter, bringing the full-year growth to six percent.

In its latest meeting, the inter-agency Development Budget Coordination Committee (DBCC) also trimmed down the government’s GDP growth target to a tighter range six to 6.5 percent this 2019.

The DBCC projects that government’s GDP to grow between 6.5 and 7.5 percent in the next three years.