Philippine economic growth could approach 7 percent this year on the back on strong government spending, Manulife Asset Management and Trust Corp. said.
“We think that Philippine GDP (gross domestic product) growth will be close to 7 percent, probably one of the fastest rates of growth in Asia,” Manulife Asset Management senior strategist Geoff Lewis said in a press briefing on Monday.
The estimate, however, falls below the government’s 7.0-8.0 percent target range for 2018. It also indicates a limited expansion as the economy grew by 6.7 percent last year, slower than the 6.9 percent seen in 2016.
Manulife Asset Management and Trust Corp.’s head of equities, Mark Canizares, said the country’s attractiveness to investors would be enhanced by ongoing structural reforms and still-solid fundamentals.
He said the country was already benefiting from the Tax Reform for Acceleration and Inclusion (Train) law and the “Build Build Build” infrastructure program.
“The government’s economic managers are cognizant of the fact that when you say you want to build infrastructure, you also need to make sure you have taxes, access to debt. It seems that it is coming together,” he said.
Canizares also pointed out that public investment in infrastructure was rising.
He noted that government spending grew by 11 percent in 2017 from a year earlier while underspending was reduced to 2.5 percent from 12.8 percent in 2015. Tax collections in 2017 , meanwhile, were up 10.8 percent year on year.
“I think the overall sentiment toward infrastructure spending has shifted [to]more positive than before,” he added.
However, Canizares said the Train law’s implementation had also resulted in higher than expected inflation and interest rates.
“In addition, stronger imports for various infrastructure projects have also weakened the peso,” he noted.
Multilateral institutions have said that sustained Philippine economic growth would hinge on robust investments and the government’s infrastructure program.
The World Bank expects the economy to keep growing by 6.7 percent this year while the Asian Development Bank has a 6.8 percent forecast.