World Bank Retains 6.7% Growth Forecast for Philippines

The World Bank is keeping its 6.7 percent its growth forecast for the Philippines in 2018 and 2019 as the economy is driven by strong consumption. Private consumption is projected to grow by 5.9 percent this year and further expand by 6.2 percent in 2019. The global lender expects increased public investments due to higher public capital outlays and infrastructure spending. Meanwhile, real GDP growth is expected to accelerate at the end of 2018 and the first half of 2019 due to election–related spending.

Compared to forecasts last April, the World Bank revised government consumption growth upwards and expected private consumption growth to expand at 5.9 percent in 2018 and 6.2 percent in 2019. Investment growth was slightly upgraded due to higher public capital outlays, including increased infrastructure spending. The bank’s Economic Update report for the Philippines in April projected a slightly lower 5.8-percent growth in private consumption for 2018.

World Bank lead economist for the Philippines Birgit Hansl said the country’s ability to reach its 6.5-7.5 growth target will depend on the government’s implementation of its investment spending agenda. Hansl added that higher private investment levels will be critical to sustain growth momentum as capacity constraints become more binding.

The World Bank’s June 2018 Global Economic Prospects report urged the country to be ‘vigilant’ of the economy’s capacity to mitigate inflation and handle increasing demand. In addition, the bank warned that exports are expected to moderate in the coming years as global growth decelerates due to higher commodity prices, strong but moderating global demand, tightening of global financing conditions and other factors.

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