Economists see strong growth rebound in 2020

MANILA, Philippines — Economists expect the country’s economic growth to bounce back strongly this year after slumping to an eight-year low of 5.9 percent last year.

Fitch Solutions Macro Research has upgraded its gross domestic product (GDP) growth forecast to 6.3 percent for this year despite the slowdown in 2019.

The research arm of the Fitch Group said the acceleration in GDP growth to 6.4 percent in the fourth quarter of last year from six percent in the third quarter indicates that the stimulus implemented by the government and the Bangko Sentral ng Pilipinas (BSP) has created the desired effect of supporting the economy.

“As such, we now forecast a stronger 2020 growth figure of 6.3 percent against a prior forecast of 6.1 percent. The Philippine economy is set to rebound in 2020, owing to base effects, combined with fiscal and monetary stimulus and a modest improvement in external demand,” Fitch Solutions said.

Noelan Arbis, economist at Nomura Securities Ltd., said the Philippine economic growth would accelerate to 6.7 percent this year, driven by higher public investment spending as the government gains more traction on infrastructure projects as well as private consumption due to tight labor markets and record-low unemployment rates.

“While much attention has been paid to the fact that the government missed last year’s growth target of six to 6.5 percent, we believe the 5.9 percent growth rate remains strong and, as we have been arguing, the Philippines was a regional standout last year,” Arbis said.

Arbis also said capacity utilization rates are also at record-highs, particularly in the industrial sector suggesting that private investment prospects should also remain positive as long as growth prospects remain positive and the government continues to prioritize infrastructure.

Union Bank of the Philippine chief economist Ruben Carlo Asuncion said the Aboitiz-led bank sees the country’s GDP growth accelerating to 6.6 percent this year and to 6.7 percent next year.

“Better external environment prospects, with the signing of the US-China Phase 1 trade deal, and the signing of the 2020 national budget and the extended validity of the 2019 version, bodes well for a major economic growth pick up in 2020,” Asuncion said.