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Friday, March 29, 2024

ADB sees growth moderating to 6.4%

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The Asian Development Bank said  Thursday the economic growth of the Philippines will likely decelerate to 6.4 percent this year from the revised 6.9-percent expansion in 2016, in the absence of election-related spending and as commodity prices rise.

ADB said in its Asian Development Outlook 2017 report that gross domestic product growth was expected to accelerate to 6.6 percent in 2018 or once the government ramped up public infrastructure investment. 

“The Philippines is in a sweet spot for economic growth. The biggest contributor to growth is investment, both public and private, exceeding the growth contribution from consumption,” ADB country director Richard Bolt said in a statement.

“Effective implementation of the government’s newly announced development plan will help make growth more inclusive and reduce poverty,” Bolt said.

The Philippine Statistics Authority on Thursday revised upward the 2016 GDP growth to 6.9 percent from an earlier estimate of 6.8 percent on faster growth in sectors such as construction and mining and quarrying.

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The government expects GDP to grow between 6.5 percent and 7.5 percent this year, driven by robust domestic consumption, higher fiscal spending and investments, particularly in infrastructure.

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the Philippines had the ability to extend the 72 consecutive quarters of sustained economic growth as the country’s macroeconomic fundamentals remained strong.

ADB said the Philippines’ strong economic growth in 2016 was largely due to consistently strong domestic demand, further lifted by spending in last year’s elections. 

The ratio of fixed investment to GDP reached 23.8 percent last year, the highest in over a decade. Private consumption, comprising nearly 70 percent of GDP, grew 6.9 percent last year on higher employment rates and steady inflows of remittances reaching $29.7 billion. 

Public spending also grew 8.3 percent with increased expenditure on social programs, including the conditional cash transfers, which reached 4.4 million poor families in the country. 

Services, meanwhile, expanded 7.5 percent and industry registered an 8 percent growth last year.

Consumer price inflation remained modest, averaging 1.8 percent last year.

ADB said growth was expected to pick up next year as investment gained ground, particularly public infrastructure. Services, including business process outsourcing and tourism, will remain a growth driver, while inflation will likely edge up but remain within the BSP target of 2 percent to 4 percent, it said.

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