Philippine GDP growth expected to slow down

Street with Jeepneys in the Philippines © Arno Maierbrugger

The pace of economic expansion in the Philippines would further ease over the coming two years after peaking at a whopping seven per cent in 2016, think tanks Focus Economics and BMI Research said.

The assessment comes after the economy of the Philippines rose slightly less than expected in the fourth quarter of the last year, bringing annual growth to 6.7 per cent in 2017. Gross domestic product (GDP) rose 6.6 per cent year-on-year in the three months through December, according to the Philippine Statistics Authority.

Massimo Bassetti, economist at Focus Economics, said they see the country’s GDP growth will slow to 6.6 per cent this year and further to 6.5 percent next year.

However, he pointed out that household spending is expected to expand robustly, thanks to growing remittances. Bassetti also cited the government’s strong investment push that should continue to substantiate fixed investment and contribute to filling part of the infrastructure gap. The Duterte administration has committed to spend some $168 billion on crucial infrastructure projects under the Build Build Build programme until 2022.

BMI Research, a unit of rating agency Fitch Group, paints a bleaker outlook for the Philippines, with GDP expansion tapering off to 6.3 per cent this year given the deterioration in the business environment.

“However, we note that this is still a very respectable growth figure, which will be supported by positive demographics, the strong public infrastructure drive, and increasing trade links with China,” it said.

BMI said the Philippines economy would continue to be buoyed by strong demographic trends supporting savings, increased trade and investment links with China and Japan as well as a strong public infrastructure drive.

“This should see real GDP growth in the Philippines average above six percent over the medium term,” it added.

But BMI clearly pointed out it expects the worsening business environment to continue to weigh on private sector investment over the coming quarters.

“In our view, the slowdown in investment is indicative that the Duterte administration’s violent anti-drug war has likely had a negative impact on investor sentiment, while a rise in Trump’s protectionist rhetoric has led many US investors adopting a wait-and-see approach with regards to new ventures in locating their business offshore,” the research firm said.

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Street with Jeepneys in the Philippines © Arno Maierbrugger

The pace of economic expansion in the Philippines would further ease over the coming two years after peaking at a whopping seven per cent in 2016, think tanks Focus Economics and BMI Research said.

Street with Jeepneys in the Philippines © Arno Maierbrugger

The pace of economic expansion in the Philippines would further ease over the coming two years after peaking at a whopping seven per cent in 2016, think tanks Focus Economics and BMI Research said.

The assessment comes after the economy of the Philippines rose slightly less than expected in the fourth quarter of the last year, bringing annual growth to 6.7 per cent in 2017. Gross domestic product (GDP) rose 6.6 per cent year-on-year in the three months through December, according to the Philippine Statistics Authority.

Massimo Bassetti, economist at Focus Economics, said they see the country’s GDP growth will slow to 6.6 per cent this year and further to 6.5 percent next year.

However, he pointed out that household spending is expected to expand robustly, thanks to growing remittances. Bassetti also cited the government’s strong investment push that should continue to substantiate fixed investment and contribute to filling part of the infrastructure gap. The Duterte administration has committed to spend some $168 billion on crucial infrastructure projects under the Build Build Build programme until 2022.

BMI Research, a unit of rating agency Fitch Group, paints a bleaker outlook for the Philippines, with GDP expansion tapering off to 6.3 per cent this year given the deterioration in the business environment.

“However, we note that this is still a very respectable growth figure, which will be supported by positive demographics, the strong public infrastructure drive, and increasing trade links with China,” it said.

BMI said the Philippines economy would continue to be buoyed by strong demographic trends supporting savings, increased trade and investment links with China and Japan as well as a strong public infrastructure drive.

“This should see real GDP growth in the Philippines average above six percent over the medium term,” it added.

But BMI clearly pointed out it expects the worsening business environment to continue to weigh on private sector investment over the coming quarters.

“In our view, the slowdown in investment is indicative that the Duterte administration’s violent anti-drug war has likely had a negative impact on investor sentiment, while a rise in Trump’s protectionist rhetoric has led many US investors adopting a wait-and-see approach with regards to new ventures in locating their business offshore,” the research firm said.

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