Philippine economic growth likely slowed to 5.9 percent last year but could accelerate in 2016 on the back of improved state spending and infrastructure investments, a unit of the United Nations said.
The UN Economic and Social Commission for Asia and the Pacific’s (UNESCAP) estimate for 2015 is lower than the 6.1 percent gross domestic product (GDP) growth recorded in 2014. It also falls below the government’s 7-percent to 8-percent target.
Full-year results are scheduled to be announced on January 28. GDP growth picked up to 6 percent in the third quarter of last year, bringing the year to date expansion to 5.6 percent, after a disappointing first half blamed in part on government underspending.
Economic managers expect 2015 growth to be below target at around 6 percent, but claim that the the last three months of the year would show a further improvement.
UNESCAP’s Philippine forecast is in line with its 4.5 percent estimate for developing Asia-Pacific economies, the lowest since 2010.
“Although [a]deceleration in international trade coupled with decline in demand from China are the main factors behind economic slowdown in developing economies in the region, total factor productivity growth has also weakened,” it noted.
UNESCAP said the slowdown, which comes at a time when advanced economies are undergoing a mild recovery, highlights the need to reinvigorate domestic and regional sources of demand.
It noted that countries in the region were taking positive steps – with China rebalancing towards consumption and India and Indonesia building their capital stock through greater investment – but added that many obstacles remain, including infrastructure bottlenecks and slow regulatory reform progress.
Going forward, the UN arm said Philippine economic growth was likely to accelerate to 6.3 percent this year.
“In Southeast Asia, the forecast of a modest rebound is due to increased government expenditures and further progress on infrastructure investments, particularly in Indonesia, the Philippines and Thailand,” it said.
For the developing economies in the region, it said a modest rebound to 5-percent growth was forecast for 2016.
“The projected improvement in 2016 compared with estimates for 2015 is based on China’s continued slowdown being offset by smaller contraction in the Russian Federation as oil prices stabilize, albeit at a low level, stronger consumer spending in South Asia supported by moderate inflation and increased public social and infrastructure spending in Southeast Asia,” it said.