Philippine economic growth expected to slow down in 2017

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Growth of gross domestic product (GDP) in the Philippines is seen to slow down this year, at least as per the forecast of UK banking giant Standard Chartered which expects the country’s GDP to just grow by 6.5 per cent in 2017, a downward revision from the 6.8 per cent the bank set at the start of the year.

In a separate report, Metrobank pegged its growth forecast at 6.6 per cent. Both banks’ estimates are clearly lower than the 6.9 per cent registered in 2016. But they remain in the range of the government’s target for this year of 6-7 per cent.

A Standard Chartered analyst said that the economic growth forecast for the Philippine was cut to reflect the disappointing GDP expansion booked in the first quarter of the year, which was largely due to weak investment growth which largely reflects risk perception by foreign investors amid distressing government policies such as the violent war on drugs, as well as problems with the Islamic State in the south.

For 2018, Standard Chartered expects the Philippines to register 6.5 per cent GDP growth, while the country’s Development Budget Coordination Committee has set a GDP growth target of between 7 and 8 per cent for next year.

Overall, on the upside for the Philippines’ economy stand a pick-up in government spending for infrastructure and education, steady to slightly rising remittances from oversea workers, recovery in the agriculture sector and the continued strength of the services industry, namely business process outsourcing.

However, on the downside is the infrastructure building spree which, albeit driving the economy, brings down the local currency. As the Philippines imports heavy equipment and construction materials this year, it is taking up more and more US dollar loans to foot the bill. The peso has since sunk to an 11-year low of around 51 to the US dollar in July.

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Reading Time: 2 minutes

Growth of gross domestic product (GDP) in the Philippines is seen to slow down this year, at least as per the forecast of UK banking giant Standard Chartered which expects the country’s GDP to just grow by 6.5 per cent in 2017, a downward revision from the 6.8 per cent the bank set at the start of the year.

Reading Time: 2 minutes

Growth of gross domestic product (GDP) in the Philippines is seen to slow down this year, at least as per the forecast of UK banking giant Standard Chartered which expects the country’s GDP to just grow by 6.5 per cent in 2017, a downward revision from the 6.8 per cent the bank set at the start of the year.

In a separate report, Metrobank pegged its growth forecast at 6.6 per cent. Both banks’ estimates are clearly lower than the 6.9 per cent registered in 2016. But they remain in the range of the government’s target for this year of 6-7 per cent.

A Standard Chartered analyst said that the economic growth forecast for the Philippine was cut to reflect the disappointing GDP expansion booked in the first quarter of the year, which was largely due to weak investment growth which largely reflects risk perception by foreign investors amid distressing government policies such as the violent war on drugs, as well as problems with the Islamic State in the south.

For 2018, Standard Chartered expects the Philippines to register 6.5 per cent GDP growth, while the country’s Development Budget Coordination Committee has set a GDP growth target of between 7 and 8 per cent for next year.

Overall, on the upside for the Philippines’ economy stand a pick-up in government spending for infrastructure and education, steady to slightly rising remittances from oversea workers, recovery in the agriculture sector and the continued strength of the services industry, namely business process outsourcing.

However, on the downside is the infrastructure building spree which, albeit driving the economy, brings down the local currency. As the Philippines imports heavy equipment and construction materials this year, it is taking up more and more US dollar loans to foot the bill. The peso has since sunk to an 11-year low of around 51 to the US dollar in July.

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