The regional development arm of the United Nations in Asia-Pacific upgraded its 2016 growth forecast for the Philippines to 7 percent from 6 percent, citing the strong household consumption and favorable employment condition in the country.
The Bangkok-based United Nations Economic and Social Commission for Asia and the Pacific, in a year-end report, also maintained its 2017 growth forecast of 6.2 percent for the Philippines.
The Philippine economy expanded 7.1 percent in the third quarter, bringing the average growth to 7 percent in the first three quarters.
Unescap said that in Southeast Asia, economic growth was on a gradual upward trend because of higher growth in Indonesia and Thailand and sustained high growth rates of 6 percent to 8 percent in the Philippines and the so-called CLMV economies, which include Cambodia, Laos, Myanmar and Vietnam.
“In the Philippines, strong household spending was underpinned by favorable employment conditions, higher workers’ remittances, higher civil service salaries and spending related to the general elections in May 2016. Fixed investment has surged in recent quarters,” it said.
Unescap said the stable economic conditions in the second half provided an opportunity to internalize the economic, social, environmental and governance dimensions of sustainable development in a comprehensive manner.
Meanwhile, DBS Bank of Singapore said the Philippine economy was to expand above 6 percent next year despite the threat of a moderate investment growth due to accelerated fiscal expenditures by the government.
DBS Bank of Singapore said in a report Thursday the full-year investment growth was set to reach over 20 percent this year, a record high for the economy. DBS said investment became a major driver for the economy, which expanded 7 percent in the first three quarters.
“While the government is set to increase its spending next year, we still expect overall investment growth to moderate. Our concern still lies with the inventory build-up over the past years,” DBS said.
“There have been no material de-stocking activities since the second quarter of 2013. De-stocking looks imminent and once it happens, investment growth should moderate next year,” the bank said.
DBS said from a longer-term growth sustainability point of view, this might not be a bad thing altogether. It said investments would still grow around 10.5 percent next year, still in the double-digit territory.
“Not that we are projecting a slump in investments… Contribution from investments to overall GDP growth is still set to average about 2.8 percentage point in 2017, enough to maintain overall GDP growth above the 6-percent mark,” DBS said.
The economy grew 5.9 percent in 2015, one of the fastest in the region.
Global debt watcher S&P Global Ratings said the Philippine economy had the potential to grow higher next year and continue outperforming its peers in the region despite the expected adverse effects of the protectionist policy of US President-elect Donald Trump.
S&P expects the Philippine economy to grow 6.7 percent in 2016, faster than its previous forecast of 6.3 percent. The growth projection is also higher than Indonesia’s 5.7 percent, Malaysia’s 4.8 percent, Singapore’s 2.9 percent and Thailand’s 4.1 percent.
S&P also expects the Philippines to grow 6.7 percent in 2018. With Julito G. Rada