World Bank sees Philippines growing 5.8% this year
The World Bank on Tuesday forecast that the Philippine economy would grow by 5.8 percent this year, compared to the government’s projection of six to seven percent.
It is also lower than the bank’s forecast of 5.5 percent last year.
The World Bank said the growth forecast is based on the expectation that inflation will ease.
In a statement, it said growth is expected to be “driven by strong household consumption, sustained strength in the services sector, and improved trade stemming from a rebound in global demand for goods and the continued recovery of services exports such as tourism.”
It added that higher-than-expected inflation, extreme weather, and climate change, global geopolitical tensions and the possibility of a sharper slowdown in China pose risks to the country’s growth outlook.
It said the prolonged El Nino phenomenon, and possibly La Nina, could strain the domestic food supply and cause an increase in inflation.
In a press briefing, World Bank Senior Economist Ralph Van Doorn said the government’s growth projection was set during the start of the Marcos administration when post-pandemic was still ongoing.
“The growth targets for the Philippines have been set at the beginning of the term of this government It was probably set at the time when the the post-pandemic recovery was ongoing. And of course, this takes into account some of the shocks that happened since then. So, there has been revisioned to the medium-term fiscal framework and of course, the Philippines’ growth targets. It's still a little lowered out a bit reflecting the reality of global conditions,” Van Doorn said.
“Our projections, they are really based on the cyclical considerations of the country. So we think that the growth of the Philippines is growing at close to its potential growth rate. Meaning at this stage with its current productive capacity, this is roughly What we can expect in Philippines, say, 5.9 percent. It means that pushing…if it were to grow faster, it could lead to, you know, increased inflation,” he added.
Van Doorn said that to manage inflation, it was important for the government to enforce non-monetary strategies including “efforts to optimize supply and demand management and to secure timely and adequate imports of staple food items.”
“The government needs to continue providing social assistance to vulnerable groups who are disproportionately affected by high food inflation,” he added.
He said that they expect that improving global conditions will lead to a large contribution of exports, mainly in electronics, tourism, information technology (IT), and business process outsourcing (BPO).
Van Doorn said it was important for the government to enhance its revenue collection so it could finance development programs.
He also said additional revenue efforts could focus on broadening the tax base, rationalizing tax incentives, strengthening tax administration, and improving collection efficiency. Jaspearl Tan/DMS
