ADB lowers economic growth forecast to 6%
The Asian Development Bank on Tuesday reduced its 2015 growth forecast for the Philippines to 6 percent from the previous estimate of 6.4 percent, amid the slowdown in China and other trading partners.
The Philippines will see a mild pullback in growth in 2015 before the economy bounces back in 2016 on a pickup in government spending and a likely rebound in exports, ADB said in an update of its flagship annual economic publication Asian Development Outlook 2015.
It said growth in 2016 would rebound to 6.3 percent, unchanged from ADB’s earlier projection.
Latest Philippine Statistic Authority data showed the economy expanded 5 percent in the first half, the slowest first-semester growth since 2011.
“After a slow start to the year we are now seeing a pick up in fiscal spending which combined with spending linked to the May 2016 elections will help lift the domestic economy,” said ADB country director Richard Bolt.
Bolt said the economic outlook remained favorable despite external headwinds such as the anticipated Unites States Federal rate hike and the recent devaluation of Chinese yuan.
The ADB, however, said growth should be supported by robust household spending and private investments and a pickup in government expenditure.
The report said risks to the outlook were slower than expected economic growth inChina and severe impact of El Niño dry spell which would hurt rural incomes and also impact food and utility prices.
ADB trimmed its GDP growth forecast for China to 6.8 percent in 2015 and 6.7 percent in 2016.
Southeast Asia’s growth forecast was also cut down to 4.4 percent from the 4.9 percent forecast in March. Regional growth for 2016 was also trimmed to 4.9 percent from the 5.3 percent projection.
Among Asean countries, Myanmar was projected to have the highest growth of 8.3 percent followed by Cambodia with 7 percent and Lao People’s Democratic Republic with 6.7 percent growth.
“Southeast Asia is bearing the brunt of the slowdown in the PRC---one of its key markets---- as well as subdued demand from industrial countries, with growth in 2015 now seen at 4.4 percent, before bouncing back to 4.9 percent in 2016,” said ADB chief economist Shang-Jin Wei.