MANILA — The Philippines will continue to be one of the fastest-growing economies in East Asia and the Pacific in the next two years despite political noise, World Bank’s latest estimates showed.
This, even as the Bank revised its forecast growth for the Philippine economy for 2017 to 6.6 percent from 6.9 percent, partly due to slower-than-expected implementation of public investment projects.
“Regarding the politics in the Philippines on how it has affected growth rates, we don’t in our analysis see any impact of this as yet. The Philippine economy will be one of the fastest growing in this region and certainly among the largest economies,” Sudhir Shetty, Chief Economist for the East Asia and Pacific region, said in a teleconference.
Shetty said the local economy is forecast to grow slower, as the implementation of public investment projects is “taking a bit longer than we expected.”
He underscored the need for the Philippines, along with Thailand, Cambodia and Lao PDR, where public infrastructure programs have been expanding, to prioritize measures to improve public investment management.
“What is equally important is not just making the plans to increase these investments but also paying attention to how these projects are selected to ensuring that they are implemented on time, that they are implemented according to the budget,” noted the economist.
Shetty added it is also crucial for the Philippines to look for ways to raise more revenues in a bid to support its ambitious plans to expand public infrastructure over a period of time.
He believed that the tax reform program “is very important for the fiscal prospects and the growth prospects of the Philippines.”
Meanwhile, in its October 2017 edition of the East Asia and Pacific Economic Update, WB also projected the Philippine economy growing at 6.7 percent in 2018 and 2019. It expanded by 6.9 percent in 2016.
The country’s economic growth is even expected to outpace that of China, which is forecast to accelerate by 6.4 percent and 6.3 percent in 2018 and 2019, respectively.
China’s gradual rebalancing away from investment and towards domestic consumption is expected to continue.
The Bank noted the medium-term growth outlook remains positive and is expected to be anchored in growth in the Philippines’ main trading partners which would lead to higher external demand.
Imports would also remain elevated due to necessary imports of intermediate and capital goods, including for the infrastructure program.
“The pace of economic growth could be slower if the government is unable to timely deliver on its planned infrastructure program. Complementary reforms to address budget execution and implementation bottlenecks and to ensure high quality of spending are needed,” it said.
The WB added that maintaining fiscal sustainability over the medium-term would also depend on the success of the priority tax reforms. (PNA)
