Philippine GDP to grow 6.8% this year, 6.9% next year —ADB

The Asian Development Bank (ADB) on Wednesday retained its 6.8-percent outlook on Philippine economic growth this year, but hinted that this may further accelerate in 2019.

The Manila-based multilateral lender noted in its Asian Development Outlook 2018 that the Philippines gross domestic product (GDP) will grow by 6.8 percent this year and by 6.9 percent in 2019.

“Growth in the Philippines and Thailand will benefit from higher consumption and a continued rise in public investment, in addition to slower but still solid expansion in tech exports,” the ADB report read.

The Department of Finance (DOF) has said Filipino consumers will be given a combined P10 billion “cash bonanza” to spend more monthly, given the passage of Tax Reform for Acceleration and Inclusion law.

The TRAIN was signed into law by President Rodrigo Duterte on Dec. 19, 2017. It lowered the personal income tax (PIT) rates and expanded the value-added tax (VAT) base starting January 2018.

The government said earlier it targets economic growth at 7.0 to 8.0 percent from 2018 to 2022, in line with plans to boost infrastructure spending largely financed by tax revenues.

The ADB, however, flagged the implications of more complicated tax systems.

“Complicated tax systems with many rates, exemptions, deductions, and concessions increase the cost of tax administration and of monitoring compliance. while creating opportunities for tax avoidance and tax planning, which are seen to favor higher-income taxpayers because they generally have more scope for shifting income to avoid higher rates,” it said. —VDS, GMA News