Think tank raises PH growth forecast
Credit to Author: ANNA LEAH E. GONZALES| Date: Mon, 18 Feb 2019 16:26:09 +0000
An Asean + 3 think tank has raised its 2019 growth forecast for the Philippines, citing an expected recovery in private consumption and the continuation of a massive government infrastructure program.
In its 2018 Annual Consultation Report on the Philippines, the Asean+3 Macroeconomic Research Office (AMRO) said it now expected to country to grow by 6.4 percent this year, slightly higher than the previous estimate of 6.3 percent.
“The government’s ‘Build Build Build’ infrastructure program will continue to provide impetus to the economy,” it said.
“Private consumption is also expected to recover as inflation pressure eases and consumer confidence is restored. Nonetheless, exports will remain tepid,” it added.
Consumer price growth, which weighed on the economy last year, is expected to ease in 2019 due to lower oil prices and the implementation of the rice tariffication law.
Risks to the outlook, AMRO said, are mostly “short-term”.
The major external risks involve rising trade tensions and a sharp tightening of financial conditions while domestically, “higher-than-expected inflation and pockets of financial vulnerabilities are the key concerns.”
“While domestic risks have started showing signs of easing, external risks have remained heightened. Policymakers need to remain vigilant on the development of short-term risks and get ready to recalibrate their policy mix to sustain macroeconomic stability,” it said.
Amro said the government should calibrate fiscal policy to contain inflation pressures and support the external position by reprioritizing expenditures.
It urged the government to “streamline current expenditures and continue to improve implementation capacity and spending efficiency of infrastructure projects, and adjust the pace of implementation so that it is in line with the absorptive capacity of the economy.”
“Tax reforms should proceed with careful design and implementation to minimize potential negative impacts on investment and employment during the transition period,” it added.
Monetary authorities, meanwhile, should hold off from adjusting policy until consumer price growth remains “firmly” within the target band, the think tank said.
AMRO was created to advise the 10-member Association of Southeast Asian Nations and China, Japan and South Korea.
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