WB keeps 6.7% growth forecast for PH in 2018

The World Bank (WB) retained its Philippine economic growth forecasts for a two-year period as the country is expected to remain as one of the fastest growing economies in Southeast Asian region.

In its latest East Asia Pacific economic update released yesterday, the Washington-based multilateral institution said that the country’s economy, as measured by its Gross Domestic Product (GDP), may expand by 6.7 percent this year and in 2019, keeping the lender’s growth projections in October last year.

For 2020, the Philippine economy is seen to grow at a slightly slower pace of 6.6 percent, the World Bank report indicated.

However, the bank’s three-year GDP forecasts are below the government’s target range of between 7.0 percent and 8.0 percent starting this year until the end of the Duterte administration’s term in 2022.

But World Bank’s growth outlook for the Philippines this year is quicker compared with developing East Asia Pacific’s 6.3 percent GDP rate estimates.

The World Bank said the above 6.0 percent average GDP forecast for East Asia Pacific nations is due to a continued broad-based global recovery and robust domestic demand in the region.

But still, the World Bank also said that emerging risks to stability and sustained growth require close attention.

“Even with favorable prospects, policy makers in the region will be well advised to recognize and address emerging challenges,” the World Bank said.

“Attending to the short-term risks associated with a faster-than-expected rise in interest rates in advanced economies and possible escalation of trade tensions will require tighter monetary policy and larger fiscal buffers. To raise growth in the longer term, boosting public and private investment, productivity growth, and human capital will be key,” the lender added.

After growing faster than anticipated last year, World Bank said that China is expected to slow moderately to 6.5 percent in 2018 as its economy continues to rebalance away from investment and towards domestic consumption with policies that focus more on slowing credit expansion and improving the quality of growth.

Excluding China, growth in developing Easy Asia Pacific is expected to remain stable this year at 5.4 percent, reflecting continued robust domestic and external demand.

Growth in Indonesia and Thailand is expected to strengthen in 2018, with improved prospects for investment and private consumption.

In Malaysia and Vietnam, growth is expected to ease, as public investment moderates in

the former and agricultural production stabilizes in the latter after rebounding in 2017.

Prospects for several of the smaller economies are generally favorable, in part due to higher commodity prices.

In Myanmar, economic growth is projected to rise in 2018, although investment prospects could deteriorate with the ongoing developments in Rakhine State.

Mongolia’s higher growth is predicated also on continued macroeconomic stabilization.

Papua New Guinea could experience a cyclical recovery as commodity prices rise, although the recent earthquake could hurt prospects.

Growth in Cambodia is expected to pick up slightly, while Lao PDR will likely see stable growth.

“While the region’s growth outlook is positive, there are challenges for policy makers in the short and medium term,” said Sudhir Shetty, World Bank Chief Economist for the East Asia and Pacific region.

“Addressing these challenges will require measures to dampen the possible impacts of a more rapid pace of monetary policy tightening in advanced economies as well as to enhance longer-term growth prospects in the face of policy uncertainty, particularly around global trade,” Shetty said.