World Bank maintains PH 2016 growth forecast at 6.4%

MANILA, Philippines – The World Bank has maintained its growth forecast of 6.4% for the Philippines this year, the Washington-based agency reported Thursday, January 7 (Philippine Standard Time).

The growth projection for the Philippines this year reflects accelerated implementation of public-private partnership projects and spending related to the May 2016 presidential election, the World Bank said.

According to the World Bank's Global Economic Prospects report released January 6 (Eastern Standard Time), the Philippine economy is expected to grow above 6% over 3 years, with the economy projected to expand by 6.2% in 2017 and 2018.

The multilateral bank agency said among the large developing ASEAN (Association of Southeast Asian Nations) economies, growth in the Philippines and Vietnam will benefit from rising household incomes caused by low commodity prices, a diversified and competitive export base (Vietnam), and investment driven by robust foreign direct iinvesments.

Lower expectations

While unchanged, the World Bank's forecast for the Philippines this year is below the government's growth target of 7% to 8%.

For 2015, the World Bank projects that the country grew by 5.8%, which is below the National Economic and Development Authority's full-year goal of 6%. (READ: PH GDP grows 6% in Q3)

Growth in the East Asia and Pacific region is also projected to slow to 6.3% in 2016 from an estimated 6.4% expansion in 2014, with China’s expansion expected to ease to 6.7%, from a projected growth of 6.9% last year.

The agency said that risks to the regional outlook include a faster-than-expected slowdown in China. 

"The possibility of greater financial market volatility and restricted credit are also risks to growth," World Bank said.

It added that a steep appreciation of the value of the US dollar and a slower-than-expected acceleration of high income economies would also dent growth prospects in the region.

The slowing growth in China is expected to offset a modest pickup in growth among members of ASEAN this 2016, the World Bank said.  

The region is expected to benefit from the strengthening recovery in advanced economies, low energy prices, improved political stability, and continued favorable conditions in global financial markets, despite anticipated monetary policy tightening in the US, it added.

Modest growth

The global economy is expected to accelerate at a modest pace of 2.9% this year, from 2.4% growth in 2015 as advanced economies gain speed, the agency said.

But the weak growth among major emerging markets will weigh on global growth in 2016.

Simultaneous weakness in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity because those countries have been powerful contributors to global growth for the past decade, the World Bank said.

Developing economies are seen to expand by 4.8% in 2016, less than expected earlier but up from a post-crisis low of 4.3% in the year just ended, the World Bank said.

"More than 40% of the world's poor live in the developing countries where growth slowed in 2015. Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable," said Jim Yong Kim, World Bank Group president.

"The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies," he added. – Rappler.com