The World Bank expects the Philippine economy to grow 6.4 percent this year, or 0.1-percentage-point lower compared to its January projection of 6.5 percent, amid the expectation for a weaker global expansion.
The multilateral lender said in its June 2019 “Global Economic Prospects: Heightened Tensions, Subdued Investment” report that the Philippines would likely grow 6.5 percent in 2020 and 2021. Both forecasts were also slightly lower than its previous estimate of 6.6 percent for both years.
Data showed that despite the downward revisions, the Philippines would remain one of the stronger economies in the East Asia and Pacific region this year. It will outperform Thailand (3.5 percent), Malaysia (4.6 percent), Indonesia (5.2 percent) and China (6.2 percent).
Meanwhile, Vietnam (6.6 percent), Myanmar (6.5 percent), Mongolia (7.2 percent), Laos (6.6 percent) and Cambodia (7 percent) are seen to grow faster than the Philippines.
“Inflation is subdued or declining in most countries [Cambodia, the Philippines, Thailand, Vietnam], allowing monetary authorities to keep policy rates steady, generally at accommodative levels,” the bank said.
“In the Philippines, private consumption is rebounding amid slowing inflation and improving employment conditions. In addition, election-related spending in the first half of 2019 is giving the economy an additional boost and is partly mitigating the impact of weakening exports,” the World Bank said.
Compared to the Philippine Economic Update the bank released in April 2019, the forecasts for the Philippines were retained at 6.4 percent for 2019, 6.5 percent for 2020 and 6.5 percent for 2021.
Global economic growth was forecast to ease to 2.6 percent in 2019 before inching up to 2.7 percent in 2020. It said growth in emerging market and developing economies was expected to stabilize next year as some countries would move past periods of financial strain, but economic momentum would remain weak.
World Bank Group president David Malpass said current economic momentum remained weak, while heightened debt levels and subdued investment growth in developing economies were holding countries back from achieving their potential.
“It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment,” Malpass said.
Growth in East Asia and the Pacific is projected to slow from 6.3 percent in 2018 to 5.9 percent in 2019 and 2020. This is the first time since the 1997-1998 Asian financial crisis that growth in the region would drop below 6 percent, the bank said.
Growth in China is expected to decelerate from 6.6 percent in 2018 to 6.2 percent in 2019, on deceleration in global trade, stable commodity prices, supportive global financial conditions and the ability of authorities to calibrate supportive monetary and fiscal policies to address external challenges and other headwinds.