The World Bank on Wednesday upgraded the 2016 growth forecast for the Philippines to 6.9 percent from the previous estimate of 6.8 percent as the country continues to show strong economic prospects.
The Washington-based multilateral lender said in its ‘Global Economic Prospects’ report the Philippines was expected to post an average growth of 6.8 percent in 2017 to 2019 on the back infrastructure development.
“Among the large commodity importers, Vietnam and Philippines continue to have the strongest growth prospects, although capacity constraints will likely limit acceleration in the medium term and could cause overheating pressures,” the World Bank said.
It said buoyant inflows of the remittances and strong revenue from services exports would also push the country’s growth forward.
The inter-agency Development Budget Coordination Committee set the growth target for the Philippines at 6.5 percent to 7.5 percent in 2017 and 7 percent to 8 percent percent in 2018 and 2019.
Recent data showed the economy grew 7.1 percent in the third quarter of 2016, bringing the average growth in the three quarters to 7 percent. The government will announce the full-year growth figures on Jan. 26.
Meanwhile, credit watchdog S&P Global Ratings also raised the Philippines’ growth forecast in 2017 to 6.4 percent from the previous estimate of 6.3 percent, citing the country’s strong external position and low and declining external debt.
The revised forecast showed the Philippines would remain in the sweet spot and outperform most of its peers in the Asian region.
The revised GDP forecast was at par with China’s 6.4 percent, but higher than 5.2 percent for Indonesia, 2.7 percent for Australia, 1.3 percent for Hong Kong, 0.9 percent for Japan, 2.7 percent for Korea, 4.5 percent for Malaysia, 1.7 percent for Singapore, 2 percent for Taiwan, 3.4 percent for Thailand and 6.2 percent for Vietnam.
India is the only country seen to grow faster than the Philippines this year at 8 percent.
S&P said despite the stronger economic outlook, a higher sovereign rating for the Philippines was unlikely over its two-year ratings horizon. S&P particularly cited the country’s weakness in the area of economic assessment but noted strengths in both external and fiscal and debt burden assessments.
S&P upgraded the Philippines’ investment rating to ‘BBB’ from ‘BBB-’ with a stable outlook on May 8, 2014.
“The stable outlook balances the Philippines’ lower middle-income economy and diminished policy stability, predictability, and accountability against its strong external position, which features rising foreign exchange reserves and low and declining external debt,” S&P said. With Julito G. Rada