Philippines Growth to Remain Strong on Investment, Consumption
OREANDA-NEWS. Robust growth is set to continue in the Philippines in 2016 and 2017 on the back of strong investment, private consumption, and the government plan to accelerate investment in infrastructure and human capital, says a new Asian Development Bank (ADB) study.
In an update of its flagship annual economic publication, Asian Development Outlook 2016, ADB now forecasts 2016 gross domestic product (GDP) growth of 6.4%, up from its March projection of 6%. For 2017, growth is seen dipping back slightly to 6.2%, but is still above the previous forecast of 6.1%. The Philippines has emerged as one of the fastest-growing economies in Southeast Asia.
“The outlook for the Philippine economy remains strong amid buoyant investment and domestic consumption,” said Richard Bolt, ADB Country Director for the Philippines. “If successfully implemented, the new government’s development agenda to step up spending on infrastructure, implement tax reforms, and cut through red tape will sustain high growth rates and increase job creation.”
The surge in investment and consumption saw the economy expand by 6.9% in the first half of 2016. Election-related spending and consumption, along with booming fixed investment from both the private and public sectors, were the key drivers, with the ratio of GDP to fixed asset investment reaching its highest level in over a decade. Underpinning the strong performance of consumption was a rise in job creation, with the unemployment rate falling to 5.4% in July 2016 from 6.5% the year earlier, and remittances from Filipinos overseas.
Services, the largest sector of the Philippine economy, generated two thirds of the growth, with retail trade, business process outsourcing, and real estate activity leading the way, while merchandise exports remained subdued, amid still soft global demand.
Moving forward, the Update says a continuation of the strong growth will hinge on advancing the reform agenda, which includes measures to address infrastructure bottlenecks, stronger efforts to develop rural and regional areas, and enhancing transparency and accountability in government.