Philippine Economic Growth to Pick Up in 2019 – AMRO

According to a regional think tank, the Philippines’ economic growth is expected to pick up this year. This is even as it advises policy makers to be mindful of short-term risks and keep interest rates in check.

The ASEAN+3 Macroeconomic Research Office (AMRO) has increased its growth forecast for the country to 6.4% this year, according to the 2018 Annual Consultation Report on the Philippines published last February 18. This new forecast is higher than the 6.3% estimate in January, and the actual 6.2% clocked in at the end of 2018. However, this is still lower than the government’s goal of 7-8% growth.

“In 2019, economic growth is projected to stay resilient, supported by robust domestic demand. However, policy makers need to remain vigilant on the development of short-term risks and get ready to recalibrate their policy mix to sustain macroeconomic stability,” said AMRO in the report.

This resurgence is good news as economic growth slowed to a three-year low of 6.2% due to weaker domestic private consumption and external demand.

Economy to recover from a 10-year inflation rate high in 2018

Last year, inflation hit a 10-year high of 5.3%. This was in part due to the new excise tax law (or the Tax Reform for Acceleration and Inclusion (TRAIN) Act) as well as skyrocketing global oil prices. Agricultural damage from rains and typhoons also resulted in domestic food supply bottlenecks that weighed on consumers’ shoulders.

AMRO said that for this year, “private consumption is expected to recover as inflation pressure eases and consumer confidence is restored.”

The country’s growth momentum is expected to gradually recover this year as domestic demand picks up. Inflation is also expected to settle back to the central bank’s 2-4% target. This is due to “lower oil prices and continuing rollout of government’s measures to dampen inflationary pressures, such as the passage of the rice tariffication bill.”

In addition, AMRO said that the government’s “Build, Build, Build” Infrastructure program is expected “to continue to provide impetus to the economy.”

via Business World / Melissa Luz T. Lopez