THE Asian Development Bank (ADB) said it kept the 6 percent gross domestic product (GDP) growth it had forecast for the Philippines this year, while the prospects for the rest of developing Asia remain largely in line with its earlier projections despite disappointing growth in the United States and a surprise Brexit vote outcome that chilled already tepid recovery in the euro area.
ADB’s projections and views are in a new supplement to its Asian Development Outlook 2016 (ADO 2016) report, which was first released in March.
The bank’s projection for the Philippines is at the lower end of the government’s revised 6-percent to 7-percent target and slightly above the 5.9 percent growth achieved in 2015.
Going forward, ADB said Philippine economic growth would accelerate slightly to 6.1 percent.
ADB’s maintaining its original forecast is in contrast to the view of most analysts surveyed
by The Manila Times, who raised their full-year projections after a higher-than-expected 6.9 percent GDP growth in the first quarter of the year, and favorable impressions of the economic program of the Duterte government.
Earlier, First Metro Investment Corp. (FMIC), banking giants Standard Chartered, DBS, and HSBC, US-based think tank IHS, debt-watcher Standard & Poor’s Global Ratings, Nomura Global Economics, and London-based consultancy Capital Economics all raised their growth forecasts to between 6 percent and 7 percent, with a consensus forecast of 6.3 percent.
In its Development Outlook supplement, the ADB said growth in Asia and the Pacific’s developing economies for 2016 and 2017 will 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 last month’s Brexit vote.
ADB now forecasts 2016 growth for the developing economies at 5.6 percent, below its previous projection of 5.7 percent. For 2017, growth is seen unchanged at 5.7 percent.
“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 Shang-Jin Wei, ADB’s chief economist. “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,” he added.
Growth in 2016 and 2017, the report noted, is led by South Asia and India in particular, which continues to expand strongly, while China is on track to meet earlier growth projections.
In East Asia, despite muted activity in Hong Kong, China, and the Republic of Korea, growth forecasts are unchanged at 5.7 percent in 2016 and 5.6 percent in 2017, with China, the world’s second largest economy, on track to meet projected growth of 6.5 percent in 2016 and 6.3 percent in 2017.
South Asia, meanwhile, is expected to be the fastest growing subregion, led by India, whose economy has shrugged off global headwinds and is on track to meet ADB’s March fiscal year 2016 (year to March 2017) projected growth target of 7.4 percent, supported by brisk consumer spending and an uptick in the rural economy.
In Southeast Asia, growth projections for the subregion in 2016 and 2017 remain unchanged at 4.5 percent and 4.8 percent, with solid performances by most economies in the first half of 2016 driven by private consumption.
Continued soft commodity prices and the recession in the Russian Federation have further dampened the growth outlook for Central Asia, with the earlier 2016 forecast of 2.1 percent trimmed to 1.7 percent, and 2017 cut to 2.7 percent from 2.8 percent.
In the Pacific, growth for 2016 is expected to moderate to 3.9 percent in 2016 from 7.1 percent in 2015, with the Fijian economy reeling from Cyclone Winston.
However, the ADB said there are some bright spots with stronger-than-expected tourism receipts aiding the Cook Islands and Samoa, while Vanuatu’s economy is being boosted by the rollout of post-cyclone reconstruction work and other major infrastructure projects.