The Asian Development Bank said Tuesday it expects the Philippines to grow faster this year and next after expanding 6.7 percent in 2017 on the back of strengthening domestic demand and public spending.
“Strengthening domestic demand will underpin growth in 2018 and 2019. Investment will be supported by large public infrastructure projects such as national and provincial roads, railways, airports, and the Philippines’ first mass transit subway,” the ADB said in Asian Development Outlook 2018.
ADB said while export growth would likely moderate from last year’s rebound, low unemployment and steady remittances would continue to support private consumption. “GDP growth is thus forecast to strengthen to 6.8 percent this year and 6.9 percent next,” the Ortigas-based multilateral lender said.
ADB said it expected gross domestic product growth in Asia and the Pacific to reach 6 percent in 2018 and 5.9 percent in 2019, a slight deceleration from 6.1 percent registered in 2017.
“Economies across developing Asia will maintain the current growth momentum driven by sound policies, expanding exports, and robust domestic demand,” said Yasuyuki Sawada, ADB’s chief economist.
ADB said that an accommodative fiscal policy in the Philippines was likely to continue this year and next. “The government is mobilizing more revenue to allow for higher investment in infrastructure and social services while keeping the fiscal deficit within 3 percent of GDP in the medium term. It thus targets the ratio of revenue to GDP in the 2018 budget to rise to 16.3 percent from 15.7 percent last year,” it said.
ADB said remittances from overseas Filipinos were expected to continue to support household consumption, while a cut in the personal income tax should boost disposable income and consumption among taxpayers, but an increase in excise taxes on petroleum products and a few other commodities could be a counterweight restraining household consumption.
Meanwhile, ADB said it expected to exceed the record $1.08 billion loans it provided to the Philippines in 2017 as the government pushed for massive infrastructure projects to attain a more inclusive growth in the years ahead.
ADB Secretary Woochong Um said in a statement that majority of the record-high $1.08 billion loans provided to the Philippines last year went to infrastructure-related activities, especially in Mindanao.
“We hope to sustain and even surpass this level of assistance to the Philippines. We share with the Philippines government and all Filipinos the goal of creating a prosperous, competitive and inclusive society,” Um said.
“The Philippines can rest assured that we will be with you through all these changes. For 50 years, we have listened to you, your people, your needs and we have responded by delivering solutions to help you adapt, grow and prosper,” Um said.
Um said the ambitious P8.4-trillion ‘Build, Build, Build’ infrastructure program of the government and the comprehensive tax reforms were excellent initiatives in continuing the country’s strong economic performance.
He said the ADB was contributing to the Philippine government’s commitment to sustainable and inclusive growth by “helping improve infrastructure, regional development, public service delivery, youth employment and education, and also minimizing disaster risks, and expanding financial inclusion.”
The ADB will hold the annual meeting of its board of governors on May 3 to 6 in Manila this year to tackle the global and regional challenges brought by rapid technological progress, climate change, aging populations, urbanization and infrastructure gaps in fulfilling the institution’s vision of a “resilient, inclusive, sustainable and prosperous” Asia-Pacific region.