Philippine GDP growth forecast revised

Philippine economic growth downgraded for 2019, 2020
The US-China trade war is hitting the Philippine economy © Arno Maierbrugger

The World Bank has downgraded its 2019 growth forecast for the Philippines to 5.8 per cent, taking into account the weak and uncertain external environment and the slowdown in public investments in the first semester.

In an update to its Philippine economic survey, the multilateral bank reduced its 2019 growth forecast from the earlier prognosis of 6.4 per cent in April.

“Weakening global demand, including from China, and heightened uncertainty around ongoing US-China trade tensions led to a decline in exports and investment growth, testing the resilience of the region,” according to Weathering Growing Risks, the October 2019 edition of the World Bank’s East Asia and Pacific economic update.

As of the first half of 2019, GDP growth hit only 5.5 per cent, amid lower spending due to the budget impasse earlier this year.

The country’s growth is expected to bounce back to 6.1 per cent in 2020 and 6.2 per cent in 2021, assuming that there are no more delays in the passage of the budget.

The downgrade for the Philippines comes after the Asian Development Bank (ADB) in its September update for the Asian economy revised its GDP growth forecast for entire Southeast Asia, saying that the region was hit hard by persistent trade friction between China and the US, slowing world trade and weakening global growth.

GDP forecast Southeast Asia

The ADB has a slightly better 2019 GDP growth forecast for the Philippines of six per cent as compared to the World Bank’s 5.8 per cent

The forecast for regional GDP growth has now been revised down from 4.9 per cent in April to 4.5 per cent for this year and from five per cent to 4.7 per cent for 2020. Forecasts are down for half of the ten economies in Southeast Asia, namely Indonesia, Laos, the Philippines, Singapore, and Thailand and remain unchanged for the other half, with Brunei, Cambodia, Malaysia, Myanmar, and Vietnam on track to meet initial forecasts.

The factors that dim prospects include steep declines in export growth, weaker domestic investment, and agriculture subdued by drought under El Niño, while trade was the main problem, the ADB said.

On the domestic front, unexpected delays in implementing major infrastructure projects, particularly in the Philippines and Thailand, would pose risks to growth prospects. In the Philippines, growth prospects hinge as well on how quickly the government catches up on its public spending commitments after the delays experienced in the first half of the year.

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The US-China trade war is hitting the Philippine economy © Arno Maierbrugger The World Bank has downgraded its 2019 growth forecast for the Philippines to 5.8 per cent, taking into account the weak and uncertain external environment and the slowdown in public investments in the first semester. In an update to its Philippine economic survey, the multilateral bank reduced its 2019 growth forecast from the earlier prognosis of 6.4 per cent in April. “Weakening global demand, including from China, and heightened uncertainty around ongoing US-China trade tensions led to a decline in exports and investment growth, testing the resilience of...

Philippine economic growth downgraded for 2019, 2020
The US-China trade war is hitting the Philippine economy © Arno Maierbrugger

The World Bank has downgraded its 2019 growth forecast for the Philippines to 5.8 per cent, taking into account the weak and uncertain external environment and the slowdown in public investments in the first semester.

In an update to its Philippine economic survey, the multilateral bank reduced its 2019 growth forecast from the earlier prognosis of 6.4 per cent in April.

“Weakening global demand, including from China, and heightened uncertainty around ongoing US-China trade tensions led to a decline in exports and investment growth, testing the resilience of the region,” according to Weathering Growing Risks, the October 2019 edition of the World Bank’s East Asia and Pacific economic update.

As of the first half of 2019, GDP growth hit only 5.5 per cent, amid lower spending due to the budget impasse earlier this year.

The country’s growth is expected to bounce back to 6.1 per cent in 2020 and 6.2 per cent in 2021, assuming that there are no more delays in the passage of the budget.

The downgrade for the Philippines comes after the Asian Development Bank (ADB) in its September update for the Asian economy revised its GDP growth forecast for entire Southeast Asia, saying that the region was hit hard by persistent trade friction between China and the US, slowing world trade and weakening global growth.

GDP forecast Southeast Asia

The ADB has a slightly better 2019 GDP growth forecast for the Philippines of six per cent as compared to the World Bank’s 5.8 per cent

The forecast for regional GDP growth has now been revised down from 4.9 per cent in April to 4.5 per cent for this year and from five per cent to 4.7 per cent for 2020. Forecasts are down for half of the ten economies in Southeast Asia, namely Indonesia, Laos, the Philippines, Singapore, and Thailand and remain unchanged for the other half, with Brunei, Cambodia, Malaysia, Myanmar, and Vietnam on track to meet initial forecasts.

The factors that dim prospects include steep declines in export growth, weaker domestic investment, and agriculture subdued by drought under El Niño, while trade was the main problem, the ADB said.

On the domestic front, unexpected delays in implementing major infrastructure projects, particularly in the Philippines and Thailand, would pose risks to growth prospects. In the Philippines, growth prospects hinge as well on how quickly the government catches up on its public spending commitments after the delays experienced in the first half of the year.

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