The World Bank on Thursday, October 5, has lowered anew its forecast for the Philippines’ economic growth.
In the October edition of its East Asia and Pacific Economic Update, the international financial institution downgraded the economic growth outlook for the Philippines this year to 6.6 percent from the 6.8 percent in forecast last July—both lower than the earlier 6.9 percent in April.
The World Bank also trimmed the Philippines’ GDP (gross domestic product) forecast for 2018 to 6.7 percent, from 6.9 percent in July and April.
“The Philippine economy had a slower start in 2017 compared to 2016, when government’s election-related spending and front-loaded private investment fueled growth in the 1st half of the year,” the World Bank said in its report.
It cited delays in fiscal spending program as among the factors that contributed to the slower growth projection.
“The delay in the anticipated push of the planned government infrastructure program has been contributing to the moderation of fixed capital formation growth, softening the growth prospect for the year,” the bank noted.
Despite the latest cuts, World Bank also maintained that the medium-term outlook for the Philippines remains positive.
The Philippines is also expected to remain the fastest growing economy in Southeast Asia in 2017 and 2018.
“Growth in the Philippines is likely to expand at a slightly slower pace in 2017-18, due in part to slower-than-expected implementation of public investment projects. Nevertheless, it is expected to continue to be the fastest growing of the large ASEAN (Association of Southeast Asian Nations) economies,” it said.
Among the main drivers of economic growth, according to the report, include the steady consumption growth, improved remittances, and higher incomes, as well as an expansion of credit.
“Growth is expected to be anchored on its main trading partners which would lead to higher external demand, while imports would remain elevated due to necessary imports of intermediate and capital goods, including for the infrastructure program,” the World Bank added.
As of May, the Philippine government has so far spent P197.2 billion or 23.28 percent of its P847.2 billion budget allocated to infrastructure development.
In July, Philippine Budget Secretary Benjamin Diokno announced that the government will accelerate its infrastructure spending by at least 90 percent this year.
In a statement, World Bank Lead Economist for the Philippines Birgit Hansl said “an increase in public spending on infrastructure building is expected to boost investment growth.”
“Higher investment growth could push the country’s growth rate towards the upper end of the government’s target of 6.5 to 7.5 percent of GDP, but this is contingent on the public infrastructure program gaining full traction,” he added.