World Bank raises PH growth forecast for 2017

The World Bank raised this year’s economic growth forecast for the Philippines following the stronger than expected expansion in the thirdquarter along with the recovery of the export sector.

In a statement, the Washingtonbased lender said yesterday that it now expects the country’s economy, as measured by its gross domestic product (GDP), to grow by 6.7 percent this year from an earlier projection of 6.6 percent.

World Bank said the upward revision was following a stronger than expected growth of 6.9 percent in third quarter and a revision of GDP growth for the second quarter, from 6.5 to 6.7 percent.

This followed a similar projection last Wednesday for the Philippine economy by the Asian Development Bank.

“Continued global economic recovery gaining steam has led to higher than expected export growth for the Philippines and an encouraging upturn for the third quarter of 2017,” Birgit Hansl, World Bank lead economist for the Philippines said.

The simultaneous recovery in major advanced economies and in developing economies is boosting global trade, the bank said.

For the Philippines, World Bank said the recovery means stronger import demand

from the country’s main trading partners, such as the United States, Japan, and Europe.

Meanwhile, GDP growth projection for next year remained at 6.7 percent.

“If investment growth accelerates faster along with increased spending in public infrastructure, economic expansion can be even higher in 2017 and 2018 and exceed the current projection of 6.7 percent,” Hansl said.

Last Wednesday, the Asian Development Bank (ADB) also raised its economic growth forecasts for the Philippines amid strong infrastructure investment and robust consumption.

Based on the supplement report to its Asian Development Outlook Update 2017, the Manila-based lender now expects the country’s GDP would expand by 6.7 percent this year, faster than the previous 6.5 percent projection.

Likewise, ADB revised upward its GDP growth forecast for next year from 6.7 percent to 6.8 percent.

“Growth forecasts are revised up for Brunei Darussalam, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam,” ABD said, noting infrastructure investment continued to play important roles in Indonesia, the Philippines, and Thailand.

The bank added that private consumption aided by benign inflation has provided strong support to most subregional economies, including the Philippines, in 2017.

The Philippine economy expanded by 6.7 percent in the first threequarters of the year on accelerating investment and robust consumption, ADB pointed out.

“Public expenditure accelerated, particularly for infrastructure. The government is on track to achieve its target of spending 5.3 percent of GDP on public infrastructure this year,” ABD said.

The bank’s latest GDP projection for this year is within the government’s 6.5 percent to 7.5 percent target range, but next year’s revised forecast is still below the 7 percent to 8 percent goal.

ADB said household consumption remained strong this year in the Philippines despite moderating slightly from last year’s level.

“Net exports turned positive in the first nine months, reversing a deficit in 2016. On the supply side, services generated nearly 60 percent of GDP growth, spurred largely by trade, business process outsourcing, finance, and real estate services,” the bank said.

“Manufacturing contributed about 30 percent of the expansion in GDP, with food processing a major contributor. Finally, agriculture recovered from a dry spell last year under El Niño,” the bank added.

The Duterte administration earlier unveiled the government’s ambitious “Build, Build, Build” program aimed at ushering in “the golden age of infrastructure” after years of neglect.

Under “Build, Build, Build” plan, the government would implement 75 flagship, “game-changing” infrastructure projects, with about half targeted to be finished within President Rodrigo R. Duterte’s term.

Alongside, the Duterte administration plans to spend up to R9 trillion on hard and modern infrastructure until 2022.