The World Bank said Tuesday the Philippine economy is expected to expand by nearly 7 percent in the next three years, making it one of the top performers in the region.
World Bank lead economist Birgit Hansl said in a news briefing in Taguig City the country’s gross domestic product growth would likely reach 6.9 percent in 2017 and 2018 and 6.8 percent in 2019.
“The government’s commitment to further increasing public infrastructure investment is expected to sustain the country’s growth momentum through 2018 and reinforce business and consumer confidence,” she said.
“We project the Philippines to be one of the top growth performers in the Asian region. But the growth prospects are subject to downside risks,” Hansl said.
Hansl said exports would continue to be a drag for economic expansion. She also said the developments in the world’s advanced economies, particularly the path of monetary policy in the US, would cause uncertainties in the financial markets and affect the peso.
She said in the domestic front, the expansionary fiscal policy of the government could be at risk because it was “not matched with the amount of revenues” for the purpose.
“The outlook remains positive…. We see the government’s intent to increase investments in public infrastructure. The implementation of these will result in job creation and higher domestic consumption,” she said.
Hansl said she was not seeing any impact on growth of the proposed comprehensive tax reform program of the government, which aims to lower personal income tax and raise excise taxes.
“It is still early April, and we see no impact yet from the tax reform plan. But in July, we will consider this if there is any policy change… We see no reason at the moment to doubt the plan,” Hansl said.
Hansl said the very young population of the Philippines provided the promise of a demographic dividend period, if structural reforms allowed for conditions that would encourage savings and investments and skills developments for young workers.
The Philippine economy remained resilient to global headwinds in 2016. While a lower-than-expected global recovery weakened net exports, surging domestic demand pushed the annual GDP growth to 6.9 percent in 2016.
Consumption growth remained strong as accommodative monetary policies kept interest rates low, supporting a double-digit expansion in consumer lending.
Meanwhile, low inflation boosted households’ purchasing power, while a steady increase in remittance inflows accelerated the growth of household consumption.
The government expects GDP to grow between 6.5 percent and 7.5 percent this year, on higher fiscal spending, robust domestic demand and investment.