The World Bank Group maintained its growth forecast for the Philippine economy at 6.4 percent this year, citing public-private partnership (PPP) projects and election-related spending as economic drivers.
The Washington-based lender’s expectations are below the official 7 percent to 8 percent target of the government. The WB released its forecast with the newly launched January 2016 Global Economic Prospects report.
In East Asia and the Pacific region, the Philippines is among the countries with the strongest growth prospects for the year.
“In the Philippines, growth is projected to firm to 6.4 percent in 2016, reflecting accelerated implementation of public-private partnership projects and spending related to the May 2016 presidential election,” the multilateral lender said.
In 2017 to 2018, however, the World Bank said growth in the Philippines is forecast to ease to 6.2 percent.
In the East Asia and Pacific region, it said growth is estimated to have slowed to 6.4 percent in 2015, and is expected to decelerate to 6.3 on average in 2016 to 2018, reflecting the gradual slowdown in China and a sluggish recovery in the rest of the region.
“Among the large developing Asean [Association of Southeast Asian Nations] economies, growth in the Philippines and Vietnam will benefit from rising household incomes caused by low commodity prices, a diversified and competitive export base (Vietnam), and investment driven by robust FDI [foreign direct investments]flows,” it said.
Risks to the outlook stem from a larger-than-expected slowdown in China and tightening global financing conditions, the lender noted.
Growth in China is forecast to ease further to 6.7 percent in 2016 from 6.9 percent in 2015.
Global growth should pick up from an estimated 2.4 percent, albeit at an appreciably slower pace than previously projected, reaching 2.9 percent in 2016 and 3.1 percent in 2017 to 2018, it said.
Global inflation, on the other hand, is expected to increase moderately in 2016 as commodity prices level off, but will remain low by historical standards.
“A modest upturn in global activity in 2016 and beyond is predicated on a continued recovery in major high-income countries, a gradual slowdown and rebalancing in China, a stabilization of commodity prices, and an increase in global interest rates that is gradual and stays well contained,” the World Bank said.