Philippines GDP growth forecast highest among ASEAN-6

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SQQ5HIQNIMThe Philippine economy will continue its robust expansion through next year, but its growth outlook has been slightly lowered as reduced government spending, higher inflation, and monetary tightening dampen activity, says a new Asian Development Bank (ADB) report released September 25.

Gross domestic product growth (GDP) is now expected to grow by 6.2 per cent in 2014, down from the forecast of 6.4 per cent in April, and by 6.4 per cent in 2015, compared with 6.7 per cent in April, according to an update of ADB’s Asian Development Outlook (ADO) 2014, its annual economic publication released in April.

Still, comparative statistics show the country still has the highest GDP growth forecast among the Association of Southeast Asian Nations-6 (ASEAN-6) members for 2014-2015.

The slight deceleration comes with the slowdown in Philippine government spending, partly reflecting cautious spending by government agencies amid concerns over the misuse of public funds. Higher inflation and associated monetary tightening are also expected to adversely impact on growth.

In the first half of 2014, the economy grew 6 per cent on the back of export recovery and private consumption and investment expansion. Growth for the rest of this year and in 2015 hinge on expectations that post-typhoon reconstruction picks up, government fiscal disbursement improves, and exports benefit from brighter prospects in the major industrial economies.

“Consumption and investment remain strong, and exports are recovering,” said Richard Bolt, ADB country director for the Philippines. “Accelerating infrastructure projects, taking measures to strengthen competition, and increasing access to finance can boost growth and create jobs.”

Exports of goods and services in the first half of the year reversed a contraction in the first half of 2013 to rebound by 11.8 per cent by volume.

Export gains were notable in electronics including semiconductors. Imports of goods and services also recovered, but at a slower pace of 5.7 per cent.

Foreign direct investment, though low compared with other countries in the region, jumped 77 per cent in the first half of 2014 to $3.6 billion-and almost doubled in 2013 to $3.8 billion from an annual average of about $2 billion in 2008-2012. Central bank surveys show business sentiment is generally positive.

But despite strong GDP growth averaging 6.3 per cent since 2010, job generation is insufficient, said the update.

“Underemployment remains high at 18.3 per cent of those employed because new jobs are largely part time or informal. A stronger manufacturing sector-which currently generates 8 per cent of total employment-and further expansion of tourism and other service industries, would create more and better-paid jobs,” it added.

The Philippine economy mirrors a parallel slowdown in the main economies of Southeast Asia.

The report noted that except for Malaysia, “aggregate growth is moderating in 2014, slowed by stabilisation policy and weaker commodity export prices in Indonesia, political disruption in Thailand, a government spending slowdown in the Philippines, and soft domestic demand in Vietnam.”

Updated aggregate growth in the ASEAN-6 is now expected to be 4.6 per cent in 2014 from 5 per cent forecast in April, and 5.3 per cent in 2015 from 5.4 per cent.

Indonesia’s growth has been reduced to 5.3 per cent from 5.7 per cent for 2014, and 5.8 per cent from 6 per cent for 2015; Singapore to 3.5 per cent from 3.9 per cent in 2014 and to 3.9 per cent from 4.1 per cent in 2015; Thailand to 1.6 per cent from 2.9 per cent in 2014 and to stay steady at 4.5 per cent next year; and Vietnam to 5.5 per cent from 5.6 per cent in 2014 and to 5.7 per cent from 5.8 per cent in 2015.

In contrast, Malaysia’s GDP is seen to accelerate in 2014 to 5.7 per cent from the April forecast of 5.1 per cent and to 5.3 per cent from 5 per cent for 2015.

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Reading Time: 2 minutes

The Philippine economy will continue its robust expansion through next year, but its growth outlook has been slightly lowered as reduced government spending, higher inflation, and monetary tightening dampen activity, says a new Asian Development Bank (ADB) report released September 25.

Reading Time: 2 minutes

SQQ5HIQNIMThe Philippine economy will continue its robust expansion through next year, but its growth outlook has been slightly lowered as reduced government spending, higher inflation, and monetary tightening dampen activity, says a new Asian Development Bank (ADB) report released September 25.

Gross domestic product growth (GDP) is now expected to grow by 6.2 per cent in 2014, down from the forecast of 6.4 per cent in April, and by 6.4 per cent in 2015, compared with 6.7 per cent in April, according to an update of ADB’s Asian Development Outlook (ADO) 2014, its annual economic publication released in April.

Still, comparative statistics show the country still has the highest GDP growth forecast among the Association of Southeast Asian Nations-6 (ASEAN-6) members for 2014-2015.

The slight deceleration comes with the slowdown in Philippine government spending, partly reflecting cautious spending by government agencies amid concerns over the misuse of public funds. Higher inflation and associated monetary tightening are also expected to adversely impact on growth.

In the first half of 2014, the economy grew 6 per cent on the back of export recovery and private consumption and investment expansion. Growth for the rest of this year and in 2015 hinge on expectations that post-typhoon reconstruction picks up, government fiscal disbursement improves, and exports benefit from brighter prospects in the major industrial economies.

“Consumption and investment remain strong, and exports are recovering,” said Richard Bolt, ADB country director for the Philippines. “Accelerating infrastructure projects, taking measures to strengthen competition, and increasing access to finance can boost growth and create jobs.”

Exports of goods and services in the first half of the year reversed a contraction in the first half of 2013 to rebound by 11.8 per cent by volume.

Export gains were notable in electronics including semiconductors. Imports of goods and services also recovered, but at a slower pace of 5.7 per cent.

Foreign direct investment, though low compared with other countries in the region, jumped 77 per cent in the first half of 2014 to $3.6 billion-and almost doubled in 2013 to $3.8 billion from an annual average of about $2 billion in 2008-2012. Central bank surveys show business sentiment is generally positive.

But despite strong GDP growth averaging 6.3 per cent since 2010, job generation is insufficient, said the update.

“Underemployment remains high at 18.3 per cent of those employed because new jobs are largely part time or informal. A stronger manufacturing sector-which currently generates 8 per cent of total employment-and further expansion of tourism and other service industries, would create more and better-paid jobs,” it added.

The Philippine economy mirrors a parallel slowdown in the main economies of Southeast Asia.

The report noted that except for Malaysia, “aggregate growth is moderating in 2014, slowed by stabilisation policy and weaker commodity export prices in Indonesia, political disruption in Thailand, a government spending slowdown in the Philippines, and soft domestic demand in Vietnam.”

Updated aggregate growth in the ASEAN-6 is now expected to be 4.6 per cent in 2014 from 5 per cent forecast in April, and 5.3 per cent in 2015 from 5.4 per cent.

Indonesia’s growth has been reduced to 5.3 per cent from 5.7 per cent for 2014, and 5.8 per cent from 6 per cent for 2015; Singapore to 3.5 per cent from 3.9 per cent in 2014 and to 3.9 per cent from 4.1 per cent in 2015; Thailand to 1.6 per cent from 2.9 per cent in 2014 and to stay steady at 4.5 per cent next year; and Vietnam to 5.5 per cent from 5.6 per cent in 2014 and to 5.7 per cent from 5.8 per cent in 2015.

In contrast, Malaysia’s GDP is seen to accelerate in 2014 to 5.7 per cent from the April forecast of 5.1 per cent and to 5.3 per cent from 5 per cent for 2015.

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