The Asian Development Bank on Thursday reduced the 2015 economic growth forecast for the Philippines to 5.9 percent from the previous estimate of 6 percent, following the sharp decline in exports in the third quarter.
The Manila-based multilateral lender said in its Asian Development Outlook Supplement 2015 it trimmed the gross domestic product growth for the Philippines “to reflect lower-than-expected growth in third quarter.”
“The unexpectedly sharp drop in net external demand prompts a small downward revision in the growth forecast to 5.9 percent in 2015,” the bank said in the report.
The Philippine economy grew 6 percent in the third quarter, bringing the average growth for the three quarters to 5.6 percent, below the government’s full-year target of 7 percent to 8 percent.
“Private investment recorded robust expansion, and household spending was supported by higher employment, low inflation, and remittance inflows from Filipino workers overseas,” the ADB said.
The ADB said net external demand weighed on GDP growth in the first three quarters, reflecting brisk expansion in imports on strong domestic demand and a modest rise in merchandise exports.
ADB also retained its growth projection for 2016 at 6.3 percent.
The ADB retained its growth forecast for Southeast Asia at 4.4 percent this year and 4.9 percent in 2016.
“Southeast Asia as a whole is maintaining its growth pace despite marginal downward revisions for Indonesia, the Philippines and Singapore,” the ADB said.
Vietnam is seen as the fastest growing economy in Asean, with a growth projection of 6.5 percent this year and 6.6 percent in 2016.
Meanwhile, the ADB said inflation rate in the Philippines would likely pick up in the remaining months, following the severe effects of the El Niño dry spell.
“Inflation averaged 1.4 percent in the first 10 months of 2015 but could pick up in the coming months because of the increasingly severe El Niño and the weakening of peso,” the ADB said.
The Philippine peso has fallen 5 percent against the US dollar in the year to mid-November.
The ADB said inflation in 2015 was expected to average 1.6 percent.
Bangko Sentral Governor Amando Tetangco Jr. said he expected inflation to accelerate to as high as 1.2 percent in November from 0.4 percent in October.
“Lower domestic oil prices of gasoline, diesel and kerosene as well as decline in rice prices may continue to temper inflation impulses for the month,” Tetangco said.
“However, the reported higher power rates, prices of selected vegetables in Metro Manila and LPG may provide offsetting upside pressure,” he said.
Headline inflation rate remained steady at 0.4 percent in October, on ample food supply and downward cost of fuel and electricity, the Philippine Statistics Authority’s latest data showed.