THE Philippine economy may grow 6.4 percent this year and 6.2 percent in the next two years despite the weak global economy, the World Bank said.
In its Philippine Economic Update titled Outperforming the Region and Managing the Transition released Monday, the Washington-based lending agency said the local economy may surpass the forecasts if authorities can further ramp up spending on public infrastructure as planned.
In 2017, 40 percent of the planned government spending on infrastructure will be for roads, railways, seaports and airports. This can boost a large segment of the economy including industrial activities, real estate, construction, and tourism, according to the report.
World Bank Lead Economist Birgit Hansl said that domestic consumption will also continue to prop up the economy, driven by three factors: rising purchases from an expanding middle-class, remittances from overseas Filipino workers, and the expansion of jobs as a result of the growing economy.
Upon assuming office, the World Bank noted the Duterte government reassured investors and the private sector with continuity of existing macroeconomic policies including fiscal, monetary and trade policies that would support continued economic expansion and poverty reduction.
“Many reforms are being unveiled, specifically on tax policy and administration, the tracking of government spending, security of land tenure, ease of doing business, and restrictions on foreign participation,” said Hansl.
“But as policy details are still being discussed, some businesses might remain cautious. The completion of the new Philippine Development Plan this year will provide more clarity on the government’s development priorities and further improve the country’s growth prospects.”
World Bank Country Director Mara Warwick said macroeconomic stability puts the Philippines in a good position to accelerate inclusive growth that benefits all Filipinos.
“Poverty will decline faster if the returns from economic expansion are invested in building human capital by strengthening health, education, and social protection,” said Warwick.
“Currently, the poor are concentrated in the agriculture sector, where increases in productivity would generate higher incomes for rural dwellers. Achieving this will require a comprehensive rural development strategy, which is among the priorities of the current administration.”
The report noted that as economic growth is sustained, and as spending on health, education, and social protection expands, extreme poverty is projected to decline from 10.6 percent in 2012 to 7.8 percent in 2016, 7.2 percent in 2017, and 6.7 percent in 2018.
The Philippines posted gross domestic product growth of 6.9 percent in the first half of this year. (SDR/Sunnex)