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ESCAP raises Philippine economic growth forecast for 2016

Posted on December 02, 2016

THE PHILIPPINES could grow this year faster than initially thought, according to the United Nation’s (UN) regional development arm which scaled up its growth forecasts for the country in light of a more sanguine outlook on Asia Pacific it said has been resilient to global market volatilities.

In its yearend update to the Economic and Social Survey of Asia and the Pacific 2016, the Economic and Social Commission for Asia and the Pacific (ESCAP) said it has now pencilled in a 7% growth forecast for the Philippines for this year, up from the 6% it tipped in April. This is the second time this year that the UN agency revised its 2016 growth forecast for the Philippines, with the April estimate a cut from the 6.3% projection it made in mid-January. These projections compare to the government’s own 6-7% target for this year.

The latest forecast comes after Philippine growth numbers for the third quarter surprised, with gross domestic product increasing 7.1% from a year earlier, its fastest pace in three years and outperforming Asian peers China and Vietnam. Philippine growth has so far averaged 7% this year.

The recast was in step with ESCAP’s upgrading its 2016 forecast for developing Asia-Pacific economies to 4.9% from 4.8% before, riding mainly on China which is now expected to grow by 6.7% from the 6.5% earlier thought.

It kept its 2017 growth estimate for the Asia-Pacific region at 5%, and for the Philippines at 6.2% -- which in turn compares to the government’s 6.5-7.5% projection for that year.

“Resilient domestic demand and policy support have resulted in the region’s developing economies growing at a steady pace of just below 5% annually despite a sluggish global economy and weak trade growth,” ESCAP said in its yearend update.

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Judging by ESCAP’s forecast, the Philippine economy will this year outpace its Southeast Asian peers Indonesia (5%), Malaysia (4.4%), Thailand (3.3%) and Vietnam (6%).

“In Southeast Asia, economic growth is on a gradual upward trend because of higher growth in Indonesia and Thailand and sustained high growth rates of 6-8% in the Philippines and the so-called CLMV economies (Cambodia, Lao People’s Democratic Republic, Myanmar and Viet Nam),” the UN agency said.

“In the Philippines, strong household spending was underpinned by favorable employment conditions, higher workers’ remittances, higher civil service salaries and spending related to the general elections in May 2016. Fixed investment has surged in recent quarters,” it added.

However, ESCAP sees “bouts of financial volatility” resurfacing given policy uncertainties in major economies like the United States when a Trump-led administration takes over in January, as well as in Europe that is in sticky negotiations with Britain over the latter’s exit from the European Union.

ESCAP’s Philippine projection this year compares to the 6.8% upgraded outlook the Asian Development Bank is scheduled to report this month, as well as the World Bank’s and International Monetary Fund’s 6.4%. -- report from Danica Uy