By Chino S. Leyco
Manila-based Asian Development Bank (ADB) kept its economic growth forecast for the Philippines this year amid the nation’s robust domestic demand, including higher public investments in infrastructure and social services.
Citing the country’s strengthening economic growth, the ADB is projecting its gross domestic product (GDP) may grow by 6.5 percent this year, within the Duterte administration’s 6.5 percent to 7.5 percent target range.
In July, the multilateral lender jacked up its GDP projection for the Philippines from 6.4 percent to 6.5 percent, the fastest economic expansion among emerging ASEAN economies.
Along with the 2017, ADB also maintained at 6.7 percent its growth forecast for next year, which is seen to be driven by increased public investment and household consumption.
“The concerted effort by the Philippine government to improve public project implementation is bearing fruit, as public investment programs help drive continued economic expansion,” Richard Bolt, ADB country director for the Philippines said.
“A strong focus on infrastructure investment and implementation of tax reform will see the country continue its growth momentum through 2018,” he added. The economy expanded by 6.4 percent in the first half of year, a moderation from the election-driven 7.0 percent pace a year earlier.
“Part of the positive outlook on the Philippine economy is the improving consumer and business sentiment, it has consistently improved. Businesses likewise cited buoyant domestic demand, the roll out of infrastructure projects, among others,” Bolt said.
At end-June, fixed investment grew by 12.1 percent, reaching its highest share as a percentage of GDP in over a decade at 25.8 percent. Public and private investment, and household consumption supported by remittances from overseas Filipinos, were the key drivers of growth.
Services, the largest sector of the economy, increased by 6.4 percent at end-June, with business process outsourcing, trade, tourism, and finance leading the way.
Manufacturing growth quickened to 7.7 percent on strong domestic consumption and an improvement in exports.