The Asian Development Bank (ADB) and two other financial institutions predict the Philippine economy will grow between 6.3 percent and 6.8 percent this year, with the average moderating from last year.
The forecasts by analysts from the three institutions put the average rate for 2017 at 6.5 percent, easing from a revised 6.9 percent expansion achieved in 2016.
The Manila-based ADB retained its previous 6.4-percent growth outlook for the Philippines, with public and private investments seen as drivers of growth.
In its Asian Development Outlook (ADO) 2017, the Manila-based ADB said it expects growth in Philippine gross domestic product (GDP) to moderate this year, with economic indicators normalizing following the spillover effects of election spending last year.
Fastest in Asean, slower than India
Banking giant Standard Chartered Bank revised upward its GDP growth forecast for the Philippines to 6.8 percent from 6.7 percent.StanChart economist Chidu Narayanan sees the country likely remaining as the fastest-growing economy in the Association of Southeast Asian Nations-6 in 2017.
“We forecast growth of 6.8 percent in 2017, supported by robust domestic demand, increasing infrastructure investment and steady services-sector growth,” he said.
Narayanan said the bank expects still strong household spending and infrastructure investment to provide strong support for growth this year, similar to 2016.
Growth in services is also likely to remain solid, supported by wholesale and retail trade and by business, financial and other services, he said.
“Public-sector construction momentum is likely to pick up in the second half, while manufacturing growth is steady, thanks to robust domestic demand,” he added.
However, while ADB sees the Philippines’ robust economy moderating this year from the aftermath of high levels of spending around last year’s campaign period, it predicts India will lead growth in Asia with a 7.4 percent expansion in 2017 and a further 7.6 percent in 2018.
IHS Markit, among the three analysts, gave the lowest growth forecast for the Philippines of 6.3 percent, citing the information technology-BPO industry and remittances from workers abroad as two key growth engines.
“Worker remittances are equivalent to around 10 percent of total GDP and are a major pillar for private consumption spending,” IHS Asia-Pacific Chief Economist Rajiv Biswas said.
Stronger expenditure on public infrastructure will also help to underpin growth, with the Duterte Administration planning to significantly ramp up infrastructure development in 2017 and over the medium-term outlook, he said.
“The latest Nikkei Philippines Manufacturing PMI survey produced by IHS Markit also showed strong manufacturing growth in March, with robust domestic demand being the key driver of new orders growth,” he added.
Previously, 10 analysts polled by The Manila Times gave a range of 5.8 percent to 7.5 percent for their growth forecasts for the Philippines this year.
For 2018, the ADB said the Philippine economy is projected to accelerate to 6.6 percent as the government ramps up public infrastructure investment.
“The Philippines is in a sweet spot for economic growth. The biggest contributor to growth is investment, both public and private, exceeding the growth contribution from consumption,” said Richard Bolt, ADB Country Director for the Philippines.
“Effective implementation of the government’s newly announced development plan will help make growth more inclusive and reduce poverty,” he said.
Services—including business process outsourcing (BPO) and tourism—will remain a growth driver, while inflation will likely edge up but remain within the Bangko Sentral ng Pilipinas (BSP) target of 2 percent to 4 percent, the report said.
Investor sentiment also remains broadly positive although businesses are exercising caution amid rising oil prices, Philippine peso depreciation, and global uncertainties, it said.
The report noted that risks to the growth outlook including a lower-than-expected growth in the Philippines’ major trading partners and uncertain trade policies in industrial economies.
Meanwhile, it stressed that the successful implementation of the government’s development plan from 2017-2022 will be crucial.
Official data on first-quarter Philippine GDP will be released on May 18.