The World Bank has just reduced its global growth forecasts this year amid the trade tussle between the US and China and the rising debt levels of some emerging economies.
The bank in a report released Wednesday cited the prospect of the worsening trade conflicts between the world's two biggest economies as the greatest risk to global growth. The world economy is now expected to grow by 2.6 percent this year, or three tenths of a percentage point lower than the January estimate, and well below the three percent expansion in 2018, according to the Global Economic Prospects report.
World Bank president David Malpass described global growth as "fragile," and said the slowdown threatened progress in fighting world poverty. The banks also sees world trade volume decreasing sharply, expanding by 2.6 percent this year, the slowest pace since the global financial crisis and a full percentage point lower than January's forecast.
The Philippines, meanwhile, may not yet bear the brunt of the ugly trade war between the US and China. The World Bank expects it to remain one of the stronger economies in the East Asia and Pacific region this year, growing 6.4 percent this year, or just 0.1-percentage-point lower compared to its January projection of 6.5 percent.
It will outperform Thailand (3.5 percent), Malaysia (4.6 percent), Indonesia (5.2 percent) and China (6.2 percent), with Vietnam (6.6 percent), Myanmar (6.5 percent) and Mongolia (7.2 percent) likely to expand stronger.
The World Bank noted private consumption in the Philippines was rebounding amid slowing inflation and improving employment conditions. Election-related spending in the first half of 2019, says the bank, is giving the economy an additional boost and is partly mitigating the impact of weakening exports.
The Philippines may be shielding itself from the impact of the nasty US-China trade war this year, but it cannot remain complacent. It should pursue its massive infrastructure program to generate more jobs and sustain household spending in order to keep the domestic economy strong and resilient.
A stronger revenue base and a better investment climate will ensure a more dynamic economy and push the Philippines closer to its goal of reducing poverty incidence.