World Bank keeps PH growth projections
Credit to Author: Anna Leah E. Gonzales| Date: Thu, 09 Jan 2020 16:16:36 +0000
THE World Bank has maintained its Philippine economic growth forecasts for 2019 to 2021 on expectations that major infrastructure projects would be implemented in the next few years, but warned that trade and geopolitical tensions continue to pose risks.
In its January 2020 “Global Economic Prospects Slow Growth, Policy Challenges” report released on Wednesday, the multilateral lender said it projected the Philippine economy to have grown to 5.8 percent in 2019, lower than the 6.2-percent expansion in 2018 and missing the government’s downwardly revised growth target of 6.0 to 6.5 percent.
It added, however, that the economy was likely to recover and forecast to grow by 6.1 percent in 2020 and 6.2 percent in 2021 and 2022 as “large infrastructure projects come onstream.” These figures also fall below the government’s 6.5-to-7.5-percent growth goal.
The World Bank said growth in emerging markets and developing economies “has generally softened, owing to global and domestic headwinds.”
“Economies that are deeply integrated into global and regional production and trade networks — most notably in Asia and Europe — particularly suffered from global trade tensions and decelerating trade flows last year,” it said, citing the Philippines and Thailand as examples.
It also said other countries in East Asia and the Pacific were also affected by the trade dispute between China and the United States.
“In the rest of the region, some commodity importers operating at or above capacity have experienced a cyclical moderation of activity, such as Cambodia, the Philippines and Thailand,” the World Bank said, adding that “weak export growth has added to the slowdown.”
Imports also moderated in China, Malaysia, Thailand and the Philippines, which the World Bank said reflected a “drawdown of inventories and a slowdown in investment growth due to deteriorated business sentiment amid delays in certain major public infrastructure projects.”
It noted, however, that as major public infrastructure projects come onstream, economic growth in the Philippines and other countries in the region will recover.
“Regional growth, excluding China, is projected to recover slightly to 4.9 percent, as domestic demand benefits from generally supportive financial conditions amid low inflation and robust capital flows in some countries, including Cambodia, the Philippines, Thailand and Vietnam, and as large public infrastructure projects come onstream in the Philippines and Thailand,” the World Bank reported.
Risks to growth for the Philippines and other countries in the region include a sharp slowdown in global trade due to a re-escalation of trade tensions; a sharper-than-expected slowdown in major economies; and a sudden reversal of capital flows due to an abrupt deterioration in financing conditions, investor sentiment or geopolitical relations.
“An upside risk to the forecast is that the recent trade agreement between China and the United States could lead to a sustained reduction in trade uncertainty, resulting in a stronger-than-expected recovery of regional investment and trade,” the World Bank said, referring to the so-called phase-one deal that is expected to be signed next week.