ADB downgrades Philippine economic growth outlook

The Philippines is unlikely to meet its economic growth targets for this year and 2019, given the widening trade gap and a slowdown in the agriculture sector and exports,   the Asian Development Bank (ADB) said Wednesday.

The Manila-based ADB also noted higher inflation and global headwinds would make it difficult for the country to achieve its growth goals.

In a press conference in Pasig City, ADB country director for the Philippines Kelly Bird said the ADB revised its economic growth outlook to 6.4 percent this year from an earlier outlook of 6.8 percent.

For 2019, the bank revised its growth outlook to 6.7 percent from 6.9 percent.

In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2018, the multilateral lender noted the lower projections reflect “a moderation in agricultural output and exports, as well as higher inflation and continued global monetary tightening.”

“Economic growth remains strong. It softened a little bit, mainly because of exports on demand side but also agriculture on the supply side,” said Bird.

The Duterte administration has set a growth target of 7.0 to 8.0 percent in 2018 to 2022.

The Philippine Statistics Authority has reported that the trade deficit widened by 171.7 percent in July, as imports continue to outpace exports.

In the second quarter of the year, the agriculture sector grew by 0.2-percent—this compares with 6.8 percent in the services sector and 6.3 percent in the industry sector.

Despite the downgrade, Bird said the revised economic outlook is still high as macroeconomic fundamentals remain stable.

“The Philippines’ growth outlook remains stable despite moderating slightly in the first half of the year, as the country’s economic fundamentals are strong,” he said.

“We’re expecting growth to slowly pick up as public investment in infrastructure and social sectors accelerate and key economic sectors continue to perform solidly,” Bird noted. —VDS, GMA New