The Asian Development Bank on Wednesday raised its growth forecast for the Philippines in 2017 and 2018, on strong infrastructure spending and consumer demand.
The ADB said in a supplement to its Asian Development Outlook Update 2017 report that it raised its 2017 gross domestic product growth forecast to 6.7 percent from 6.5 percent and the 2018 outlook to 6.8 percent from 6.7 percent.
“This outlook assumes that growth in the government’s infrastructure program will accelerate, supported by improvements in budget execution, with more large investment projects under way,” the Manila-based multilateral lender said.
Data from the Philippine Statistics Authority showed the economy expanded 6.7 percent in the first
three quarters of 2017 on accelerating investment and robust consumption. Last year, the economy expanded 6.9 percent.
“The government is on track to achieve its target of spending 5.3 percent of GDP on public infrastructure this year. Meanwhile, household consumption remained strong despite moderating slightly from last year,” the ADB said.
It noted that net exports turned positive in the first nine months, reversing a deficit in 2016. On the supply side, services generated nearly 60 percent of GDP growth, spurred largely by trade, business process outsourcing, finance and real estate services.
Manufacturing contributed about 30 percent of the expansion in GDP, with food processing a major contributor.
The ADB also raised its 2017 growth outlook for developing Asia to 6 percent from 5.9 percent envisaged in September in Asian Development Outlook 2017 Update, as stronger than expected exports and domestic consumption fuel growth.
“The unexpectedly strong expansion in Central, East, and Southeast Asia more than offsets a downward adjustment to growth forecasts for South Asia,” it said.
Excluding Asia’s newly industrialized economies, growth is now expected at 6.5 percent this year, according to a new ADB report. The ADB kept its 2018 growth outlook at 5.8 percent.
“Developing Asia’s growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development,” said ADB chief economist Yasuyuki Sawada.
“Countries can further take advantage of the global recovery by investing in human capital and physical infrastructure that will help sustain growth over the long-term,” Sawada said.
Growth for East Asia was revised upward to 6.2 percent in 2017 from 6 percent, while the 2018 projection of 5.8 percent was maintained.
It said growth prospects in China—the world’s second largest economy—were revised upward on resilient consumption. China is now expected to expand by 6.8 percent in 2017 and 6.4 percent in 2018.
South Asia is seen to remain the fastest growing of all subregions in Asia and the Pacific, despite a downward revision from previous projections from 6.7 percent to 6.5 percent in 2017, and is expected to pick up to 7 percent in 2018.
Growth in Southeast Asia is picking up faster than earlier forecast with GDP set to expand by 5.2 percent in 2017 and 2018, compared to September 2017 forecasts of 5 percent and 5.1 percent.
It said the subregion is benefiting from stronger investments and exports, with accelerating growth for Brunei Darussalam, Malaysia, the Philippines, Singapore and Thailand.
Infrastructure investment continued to play an important role in Indonesia, the Philippines, and Thailand. Robust domestic demand—particularly private consumption and investment—will continue to support growth in the subregion, according to the report.