ADB retains Philippine growth forecasts
(The Philippine Star) - July 19, 2016 - 12:00am

MANILA, Philippines - The Asian Development Bank (ADB) has retained its growth forecasts for the Philippines even as it slightly downgrades expectations for other developing economies in Asia-Pacific.

In a supplement to its Asian Development Outlook 2016 report released yesterday, the Manila-based multilateral lending institution said it is sticking with its Philippine growth forecast of six percent this year and 6.1 percent in 2017 it earlier made in March.

The government’s economic managers on the other hand, target growth between six to seven percent this year and 6.5 to 7.5 percent in 2017.

The Philippine economy grew 6.9 percent in the first quarter of 2016, faster than the five percent clip in the first quarter of 2015, driven by election-related spending.

ADB noted this helped boost investment, household consumption and government expenditure.

“Strong growth in industry and services also fueled this impressive economic performance,” said the bank, noting robust domestic consumption gave construction and manufacturing a boost.

Growth for the rest of the year, however, is expected to slow down as the effects of election spending diminishes and the global economy continues to show weakness.

“Growth is expected to slow in the rest of 2016 as the effect of pre-election spending wanes and global economic uncertainty persists,” ADB said, noting remittances registered slow growth in the January to April period.

ADB downgraded its growth forecast across developing economies to 5.6 percent in 2016 from the earlier forecast of 5.7 percent. For 2017, growth is seen unchanged at 5.7 percent.

“Growth in Asia and the Pacific’s developing countries for 2016 and 2017 remain solid as firm performances from South Asia, East Asia and Southeast Asia help offset softness from the US economy, and near-term market shocks from the Brexit vote,” said the ADB.

“Although the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in the short term is expected to be small,” said ADB chief economist Shang-Jin Wei. “However, in light of the tepid growth prospects in the major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region remains robust.”

Growth forecast in East Asia were unchanged at 5.7 percent in 2016 and 5.6 percent in 2017 as China is expected to meed the projected growth of 6.5 percent in 2016 and 6.3 percent on 2017.

South Asia also kept its growth targets of 6.9 percent in 2016 and 7.3 percent in 2017 as India’s economy is expected to be supported by strong consumer spending and a strengthening rural economy.

Growth forecast in Southeast Asia, of which the Philippines is part of, was also unchanged at 4.5 percent in 2016 and 4.8 percent in 2017 as most economies in the region see robust private consumption.

The drag came from Central Asia, the 2016 growth forecasts for which was downgraded to 1.7 percent in 2016 from the 2.1 percent forecast in March. The forecast of 5.7 percent growth in 2017 was retained.

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