The Asian Development Bank expects Philippine economic growth to pick up next year amid the tapering off of inflationary pressures and the government’s infrastructure push.
In an update of its flagship annual economic publication, Asian Development Outlook (ADO), the ADB on Wednesday said the Philippine economy can accelerate to 6.7 percent in 2019 after growing 6.4 percent this year.
The Bank’s revised outlook for the Philippines --from 6.8 percent in 2018 and 6.9 percent in 2019-- “reflects a moderation in agricultural output and exports, as well as higher inflation and continued global monetary tightening.”
In a press briefing, ADB Country Director for the Philippines Kelly Bird said he considers the 6.4-percent still a “very robust” economic growth rate for this year amid the country’s strong economic fundamentals.
“It’s in line with the Philippine long-term growth seen in the last several years driven by private investment. We also believe that prediction for next year is around 6.7 percent again, that will be driven by investment. And we expect that to further pick up because a lot of the flagship projects under the government Build, Build, Build program will start to come on stream next year,” he said.
Bird said the country’s inflation rate is also expected to start moving towards the Bangko Sentral ng Pilipinas’ target range of 2 to 4 percent next year, as policy measures take effect.
The multilateral development bank stressed that “as monetary tightening begins to kick in, inflation will likely moderate in 2019 to 4 percent, the forecast revised up marginally from 3.9 percent.”
“The removal of administrative constraints and non-tariff barriers on food imports and implementation of productivity enhancement programs for agriculture should help stem supply side constraints on rice over time,” the ADB said in its ADO.
Headline inflation rose to average 4.8 percent in the first eight months of 2018, which the Bank attributed to supply-side factors such as poor crop production, higher international oil prices and peso depreciation.
Bird thus cited ADB’s analysis showing that the excise taxes on automobiles, petroleum products, sugar-sweetened beverages and tobacco under the Duterte administration’s first package of the comprehensive tax reform program, the Tax Reform for Acceleration and Inclusion (TRAIN), have a “relatively minor impact” on the consumer price index (CPI).