World Bank lowers PH growth forecasts
Credit to Author: ANNA LEAH E. GONZALES| Date: Mon, 01 Apr 2019 16:50:42 +0000
The World Bank on Monday trimmed its 2019 Philippine growth forecast — to 6.4 percent from 6.5 percent previously — given budget approval delays, an ongoing El Niño and a global slowdown.
Estimates for 2020 and 2021 were also trimmed to 6.5 percent from 6.6 percent, the multilateral financial institution said in its latest Philippines Economic Update.
“While external risks remain high, domestic risks are intensifying due to the delay in the approval of 2019 budget and the looming drought,” World Bank Senior Economist Rong Qian said in a briefing.
“Under a reenacted budget, no new project or program will receive funding as budget allocations are based on the appropriations made in the previous year’s budget,” she noted.
“The limited public spending may negatively impact the growth prospect for 2019. But it is expected to recover in the second half of 2019 assuming that the budget gets approved.”
Qian said the potential impact of the El Niño weather pattern on agriculture is also expected to weigh down growth,
“The El Niño might lead to food supply constraints affecting the poor and the vulnerable the most as they are spending a larger proportion of their income in food,” she said.
“If El Niño causes higher inflation, that will affect the poorest population the most again this year.”
Export growth, meanwhile, will also likely remain weak given external risks such as the US-China trade war, policy changes in advanced economies and tightening global financial conditions.
Despite the lower forecasts, World Bank officials expessed confidence in the Philippines’ prospects.
“The country’s growth outlook remains positive,” World Bank Country Director for Brunei, Malaysia, Philippines and Thailand Mara K. Warwick said in a statement.
“Higher private consumption due to lower inflation, steady growth of remittances, and election spending will fuel growth this year. Growth in public investment will be tempered in the first half of 2019 but is expected to recover in the second half of the year,” she added.
Key priorities for sustaining growth, Qian said, include prudently managing fiscal and current account balances and preserving consumer and business confidence.
“As government ramps up spending to implement its inclusive growth agenda, it would need complementary reforms to increase revenue and ensure that the country’s finances are sound and sustainable,” she said.
“In particular”, Qian noted, “additional tax policy measures which are expected to be passed in 2018 have yet to be adopted in the Congress.”
“The passing of these measures will help ensure that the government is able to limit deficit increase while continuing its ambitious infrastructure and human capital program.”
Over the long term, the World Bank report cited the need to increase investments in human capital, particularly in terms of health, nutrition, education and skills, to achieve inclusive growth.
Gabriel Demombynes, program leader for human development for Brunei, Malaysia, Philippines and Thailand, noted that one in every three children under age 5 in the Philippines was stunted.
“The Philippines needs to address the high rates of malnutrition among children, improve learning, and the quality of healthcare, to unleash the full productive potential of Filipinos,” he said.
“The country needs to focus on these challenges while undertaking reforms for improving the country’s capacity to create more high-paying jobs and speed up poverty reduction,” he added.
The post World Bank lowers PH growth forecasts appeared first on The Manila Times Online.