World Bank keeps 6.7% growth forecast for Philippines

MANILA, Philippines — The World Bank (WB) has maintained its 6.7 percent growth forecast for the Philippines until 2019, still on the back of strong fundamentals and a monetary policy supportive of growth.

In its January 2018 Global Economic Prospects report, the multilateral finance institution sees the domestic economy consistently growing by 6.7 percent from 2017 to 2019 before tapering off to 6.5 percent in 2020.

The World Bank said the Philippine economy “will continue to be the fastest-growing economy in the ASEAN” and can sustain strong growth through several policy reforms such as lowering of non-tariff barriers and easing restrictions on foreign control and ownership of businesses.

It added the Philippines is now seeing a rise in young working age population and should take advantage of this huge demographic base by strengthening the quality and flexibility of its education system and strengthening the ability of its workforce to adopt new technology.

Meanwhile, the bank expects the global economy to grow at a slightly faster pace of 3.1 percent in 2018 from three percent in 2017 as recovery in investments, manufacturing and trade continues.

Growth in advanced economies – US, Eurozone and Japan – is seen to moderate to 2.2. percent in 2018 from 2.3 percent in 2017 as central banks move toward policy normalization post-financial crisis. Growth in emerging market and developing economies – which include the Philippines – as a whole is projected to strengthen to 4.5 percent in 2018, as activity among commodity exporters continue to recover.

“The broad-based recovery in global growth is encouraging, but this is no time for complacency,” said World Bank Group president Jim Yong Kim.

“This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity,” he added.

World Bank said 2018 would be the first year since the financial crisis that the global economy would be operating at full capacity. With slack in the economy expected to dissipate, it said policymakers would need to look beyond monetary and fiscal policy tools to stimulate short-term growth and consider initiatives more likely to boost long-term potential.

“An analysis of the drivers of the slowdown in potential growth underscores the point that we are not helpless in the face of it,” said World Bank senior director for development economics Shantayanan Devarajan. “Reforms that promote quality education and health, as well as improve infrastructure services could substantially bolster potential growth, especially among emerging market and developing economies. Yet, some of these reforms will be resisted by politically powerful groups, which is why making this information about their development benefits transparent and publicly available is so important.”