By Cai Ordinario, January 20, 2020; Business Mirror
The United Nations (UN) downgraded its growth estimates for the Philippines this year, according to the World Economic Situation and Prospects 2020.
In the report, the UN projected the country’s 2020 GDP growth will reach 6.2 percent, 0.2 percentage points lower than the 6.4 percent it forecast in 2019. For 2021, the UN projects the country’s GDP to reach 6.3 percent.
The UN also said its partial estimates of the country’s 2019 full-year GDP is 5.9 percent, about 0.6 percentage points lower than the 6.5 percent estimate it made in 2019. Official 2019 GDP data will be released on Thursday, January 23.
“In the Philippines, GDP growth decelerated slightly in 2019 as budget delays contributed to a significant slowdown in public investment,” the report stated.
“As spending on infrastructure projects picks up, growth is expected to rebound from 5.9 percent in 2019 to 6.2 percent in 2020,” it added.
The country’s growth prospects this year will be boosted by consumption, as well as the low inflation environment and increased infrastructure spending.
The UN expects inflation to average 3 percent in 2020 and 3.2 percent in 2021. Last year, the UN said inflation in 2020 could average 3.2 percent.
In terms of 2019 inflation, UN’s projection initially was 4 percent after the country’s 2018 bout with high inflation, caused by supply constraints.
The Philippine Statistics Authority (PSA) said inflation averaged 2.5 percent. The UN traced this improvement to better agricultural supply leading to lower food prices.
“Private consumption, which accounts for almost 70 percent of GDP, is expected to remain robust, supported by improving employment, lower inflationary pressures and solid remittance inflows,” the UN said.
Earlier, Socioeconomic Planning Secretary Ernesto M. Pernia said he remains optimistic that the full-year growth target of 6 percent to 6.5 percent can be achieved in 2019. GDP growth in the fourth quarter could also average 6.7 percent.
In 2020, Pernia said the GDP growth target of 6.5 percent to 7.5 percent will also be achievable despite headwinds, such as the US-China trade tiff, natural disasters, and water shortage.
Neda Undersecretary for Policy and Planning Rosemarie G. Edillon said private consumption will remain the strength of the Philippine economy.
Edillon said the growth of the domestic economy fueled by consumption will “more than make up” for external headwinds, such as the US-China trade tensions.
The interagency Development Budget Coordination Committee (DBCC) has conceded that the country would not hit the higher end of the government’s growth target of 7 percent this year as it decided to scale it down to a tighter range of 6 percent to 6.5 percent.
While the government decided to maintain its growth target for next year at 6.5 percent to 7.5 percent, it also cut its growth goals for 2021 and 2022 to a range of 6.5 percent to 7.5 percent from its original growth target of 7 percent to 8 percent.
Neda said GDP growth target for this year was revised downward since the 6-percent to 7-percent original target band is “no longer credible” given the GDP growth numbers in the last three quarters.
Year-to-date economic growth is 5.8 percent after two quarters of deceleration and a surge in the growth of Philippine economy in the third quarter at 6.2 percent.