Phl growth pace seen losing steam
BUT STILL AMONG THE FASTEST GROWING IN ASIA
Barcelona-based think tank FocusEconomics forecasts the economic momentum of the Philippines losing steam, but would still be one of the fastest growing in the region.
In its latest economic outlook on the Philippines, FocusEconomics said the country’s gross domestic product (GDP) expansion would slow to 6.5 percent this year and 6.4 percent next year.
“This year’s economic activity should lose some steam, but will nevertheless remain vigorous,” the think tank said.
GDP growth accelerated to 6.8 percent last year from 5.9 percent in 2015 due to robust domestic demand and strong investments growth. This was achieved despite the slowdown in GDP expansion to 6.6 percent in the fourth quarter from seven percent in the third quarter.
Last year’s expansion was at the high-end of the six to seven percent growth target penned by economic managers.
“The latest economic indicators suggest that the strong economic momentum recorded in the fourth quarter likely carried over into the start of 2017, although the buoyant economy’s pace of expansion is moderating somewhat,” it said.
FocusEconomics said household consumption would continue to benefit from a strong labor market, expanding remittances and sustained credit growth.
“Growth in foreign workers’ remittances continued rising in December, likely supporting private consumption at the beginning of this year, and the manufacturing PMI stayed expansionary in January, despite dipping on the back of slower output growth and new work inflows,” it said.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the amount of money sent home by overseas Filipinos increased five percent to a new record high of $26.9 billion due to strong demand for skilled Filipino workers abroad. The think tank sees private consumption six percent this year and 5.9 percent next year due to steady inflow of cash remittances.
FocusEconomics said Congress is likely to pass the comprehensive tax reform program (CTRP) being pushed by the Duterte administration as early as June.
“The package includes income tax cuts for the lower and middle classes, an expansion of the VAT base and hikes to the excise tax. The expected overall budgetary effect will be to raise additional revenues needed to finance the government’s infrastructure spending plans,” it added.