Posted on March 10, 2017
Due to the Philippine government’s plan to accelerate spending on infrastructure and human capital; strong investment; and private consumption – Asian Development Bank (ADB) projects the Philippines’ economic growth to continually boost for the next two years.
The Philippines gross domestic product (GDP) forecast for this year was 6 percent in March 2016. Currently, the GDP forecast has been increased to 6.4 percent.
ADB emphasized that the Philippines has been one of the fastest-growing economies in Southeast Asia.
If the Duterte administration can successfully pull off its plans on increasing infrastructure spending, cut red tape, and implement tax reforms, the country will increase the number of jobs and sustain high growth rates.
The key drivers for the surge in investment and consumption were the booming investments from both public and private sectors and election-related spending and consumption.
Due to the strong performance of consumption, the number of jobs generated increased leading to the decrease in unemployment rate from 6.5 percent in July 2015 to 5.4 percent in July 2016.
The largest sector of the Philippine economy is services, which is also accounted two-thirds of the economic growth. Top three services in the country are retail trade, business process outsourcing (BPO), and real estate activity.
The continual economic growth will also trigger advancement on reform agenda which includes solving infrastructure bottlenecks, addressing development in rural and regional areas, and enhancing the government’s accountability and transparency.
Aside from this, to further improve the business environment, proposed tax changes must be also implemented especially in the corporate and personal income tax rates.
Over the forecast period, services specifically the retail trade, growing tourism, and the booming business process outsourcing (BPO) industry will be the key economic growth drivers.
However, the outlook has key risks. These include weaker than expected demand from major markets for Philippine exports. Nevertheless, it is also important to strengthen the rural economy to gradually mitigate poverty.
ADB raises PH growth forecasts, The Manila Bulletin