The Asian Development Bank (ADB) has cut its growth outlook for Philippines this year by 0.2 percentage points from 6.2 percent to 6 percent saying slower growth in the third quarter will drag full-year estimates.
The Philippines’ six percent growth for this year, however, leads its neighbors with 5.7 percent estimated for Malaysia, 5.6 percent for Vietnam, 5.1 percent for Indonesia, 3.2 percent for Singapore and 1 percent for Thailand.
The ADB said, however, that a rebound in government spending will help the economy to recover in 2015. In a supplement to its Asian Development Outlook 2014 Update, the bank estimates a 6.4 percent growth for the Philippines next year.
“Robust private consumption and higher private investment and net exports were insufficient to balance unexpectedly weak public spending. As growth in the first nine months of the year reached only 5.8 percent, the 2014 GDP growth forecast is downgraded by 0.2 percentage points to 6.0 percent,” it stated.
Meanwhile, it said continued strong household consumption bolstered by steady growth in remittances and increases in domestic employment along with improved government spending will support a pickup in growth next year.
For developing Asia, the lender said growth outlook remains steady, even though momentum slowed in the second half of 2014, but the declining oil prices represent a golden opportunity for many beneficial reforms. ADB forecasts GDP growth for the region of 6.1 percent in 2014, down from 6.2 percent expected in September, and 6.2 percent in 2015, down from 6.4 percent.
“These marginal downward revisions to developing Asia’s growth forecasts concur with forecasts for the major industrial economies, as their aggregate growth is revised a tick downward for 2014 and unchanged for 2015,” it stated.
While domestic factors also contribute to the softening outlook, there is upside growth potential from falling oil prices, it added.
The lender noted that depending on how long the price decline persists, it could boost growth in many countries.
“Simulations using the global projections model suggest that developing Asia, where most economies are net oil importers, could see an additional 0.5 percentage points of growth in 2015 if prices remain favorable to buyers,” it said.