Manila, Philippines – The Asian Development Bank on Thursday retained its growth outlook on the Philippines, but raised its inflation forecast for the country this year.
In a supplement to its Asian Development Outlook 2018 report, the Manila-based multilateral lender kept its growth projection for the Philippine economy at 6.8 percent and 6.9 percent for 2018 and 2019, respectively.
If realized, this would fall below the government’s 7-8 percent goal set for 2018 until the end of President Rodrigo Duterte’s six-year term.
Meanwhile, the ADB revised its 2018 inflation forecast for the Philippines to 4.3 percent from its previous estimate of 4 percent. Inflation will likely cool down to 3.9 percent next year, it added.
The lender said the adjustments to its inflation outlook were due to expectedly high global oil prices, peso depreciation, strong domestic demand and higher excise taxes on fuel and some commodities.
To supercharge economic growth, the Duterte administration plans to spend more than P8 trillion to upgrade the nation’s dilapidated infrastructure and aging ports. An ADB official recently said the economy is experiencing a “golden age.”
In the first quarter of 2018, the Philippines remained one of the best performing economies in the region after it grew 6.8 percent, faster than the preceding three month’s 6.5 percent and the 6.4 percent pace in the comparable period last year.
However, the first quarter economic growth figure fell below the government’s target band, which Socioeconomic Planning Secretary Ernesto Pernia attributed to “spoiler” inflation.
Inflation rose to a fresh five-year high of 5.2 percent in June. The central bank has responded by delivering back-to-back rate hikes.
In the same report, the ADB forecasts 2018 growth for Asia and the Pacific at 6.0 percent for 2018 and 5.9 percent for 2019.
“Although rising trade tensions remain a concern for the region, protectionist trade measures implemented so far in 2018 have not significantly dented buoyant trade flows to and from developing Asia,” said ADB chief economist Yasuyuki Sawada.
“Prudent macroeconomic and fiscal policymaking will help economies across the region prepare to respond to external shocks, ensuring that growth in the region remains robust,” Sawada added.