The Philippines economy is seen to outperform most developing nations in the East Asia and Pacific region this year despite the negative impact of the delayed passage of the national budget, according to World Bank data.
World Bank acting chief economist for East Asia and Pacific region Andrew Mason said in a report titled Managing Headwinds the Philippines would likely grow 6.4 percent in 2019 and 6.5 percent in 2020, down from the October 2018 estimates of 6.7 percent and 6.9 percent, respectively. The economy expanded 6.2 percent in 2018.
“Growth in the large Asean countries is projected to remain broadly stable, supported by resilient domestic demand. Growth in Indonesia and Malaysia is projected to remain unchanged in 2019, while growth rates in Thailand and Vietnam are expected to be slightly lower in 2019,” the bank said.
“In the Philippines, while the economy is expected to accelerate this year compared to 2018, the delayed passage of the national government budget is expected to weigh on growth in 2019 before an anticipated pick up in 2020,” it said.
The 6.4-percent GDP growth projection for the Philippines this year is higher than Indonesia’s 5.2 percent, Malaysia’s 4.7 percent and Thailand’s 3.8 percent. Only Vietnam is seen to grow faster at 6.6 percent among Asean 5 economies.
The World Bank said it reduced its growth forecast for developing East Asia and the Pacific amid the global headwinds and a continued gradual policy-guided slowdown in China.
It said growth in developing East Asia and the Pacific was projected to soften to 6 percent in 2019 and 2020 from 6.3 percent in 2018.
The bank said in the April 2019 edition of East Asia and Pacific Economic Update that while trade policy uncertainty abated somewhat, global trade growth was likely to moderate further. Domestic demand remained strong in much of the region, partly offsetting the impact of slowing exports.
“The region’s resilient growth should bring about further poverty reduction, already at historic lows. By 2021, in fact, we expect extreme poverty to dip below 3 percent,” said World Bank vice president for East Asia and Pacific Victoria Kwakwa.
“At the same time, however, half a billion people in the region remain economically insecure, at risk of falling back into poverty”• an important reminder of the scale of the challenges facing policymakers,” she said.
China’s ongoing, policy-guided slowdown will lead to 6.2 percent growth in 2019 and 2020, down from 6.6 percent in 2018. Growth in Indonesia and Malaysia is projected to remain unchanged in 2019, while growth rates in Thailand and Vietnam are expected to be slightly lower in 2019.
It said growth prospects among the smaller economies in EAP remained favorable. Large infrastructure projects are expected to accelerate growth for Lao and Mongolia while Cambodia’s growth is projected to remain robust, although at a slower pace than in 2018, mainly due to weaker-than-expected external demand.
“While the economic outlook for EAP remains largely positive, it is important to recognize that the region continues to face heightened pressures that began in 2018 and that could still have an adverse impact. Continued uncertainty stems from several factors including a further deceleration in advanced economies, the possibility of a faster-than-expected slowdown in China, and unresolved trade tensions,” said Mason.
The interagency Development Budget Coordination Committee updated its growth forecast for the Philippines this year to a range of 6 percent to 7 percent from the previous estimate of 7 percent to 8 percent.