ADB: Investments Continue to Boost PHL Growth

Investments from both public and private sectors will be the main growth driver for the country’s economy in 2017 and 2018, the Asian Development Bank (ADB) said in a briefing Thursday.

The Asian Development Outlook (ADO) 2017, ADB’s flagship economic publication, forecast that the country’s gross domestic product (GDP) growth for this year will rise 6.4 percent, and on a faster rate next year at 6.6 percent.

ADB Philippine Country Specialist Joven Balbosa noted that this growth projection is moderate compared to the 2016’s economic performance, coming from a high base of 6.8 percent GDP growth last year.

“The key drivers we are seeing in 2016, are the same themes moving forward,” said Balbosa.

He said investments would be the key driver of economic growth for this year and next year, with the government’s infrastructure projects as well as investment prospects from companies.

“Growth is expected to recover to 6.6 percent in 2018, as government plans to ramp up public investments in infrastructure as well as a second round effect of increasing fiscal spending. Fiscal policy will remain supportive to growth,” the economist said.

In 2016, both public and private investments had the largest share to growth following private consumption.

It was also the same year that the country hit the highest public investments to GDP ratio over a decade at 23.8 percent.

The contribution of investments to GDP is seen to continue, even surpassing the share of consumption — the main growth driver for the country’s economy in the past years.

Moreover, ADB Philippine Country Office Economist Aekapol Chongvilaivan said consumption is projected to ease this year due to external factors such as increasing oil prices and weakening of the Philippine peso that are pushing commodity prices to rise and affect domestic demand.

Rising international pump prices is expected to nudge domestic inflation up to 3.5 percent this year and at 3.7 percent next year, according to the ADB.

But the forecast remains within the central bank’s target range of 2.0 to 4.0 percent.

Meanwhile, ADB’s GDP growth projection for the Philippines for 2017 and 2018 is above its forecast for developing Asia.

Developing Asia’s growth is seen at 5.7 percent for this year and next year, said ADB Senior Economist Arief Ramayandi.

Aside from its robust economic growth, Ramayandi noted developing Asia’s contribution to transform itself to middle income region.

He mentioned that the share of low income population in developing Asia in 1991 was at 90.1 percent. But in 2015, low income population’s share plunged to 1.6 percent while middle income group rose 96.2 percent.

Ramayandi stressed that this development significantly reduced the percentage of low income group globally from 58.8 percent in 1991 to 8.7 percent in 2015. (PNA)