ADB trims PHL economic growth outlook

Japan-led multilateral lender Asian Development Bank on Wednesday slashed its Philippine economic growth outlook as it flagged downside risks such as the El Niño dry spell and the delay in the approval of the 2019 budget.

According to the Asian Development Outlook (ADO) 2019 released Wednesday, ADB now expects the Philippine economy to grow at 6.4 percent this year, slower than its earlier already downgraded outlook of 6.7 percent.

"The main factor would be the faster-than-expected slowdown in the global economy," ADB Philippines Country Director Kelly Bird told reporters in a press conference in Pasig City.

"The risks to the growth outlook are tilted on the downside, with rising local investments likely offsetting any impact from a faster-than-expected slowdown in the global economy," he said.

This comes as ADB sees growth to slow to 5.7 percent this year from the 5.9 percent in 2018, mainly due to the slowdown in global demand.

Bird also cited downside risks to Philippine growth such as the El Niño dry spell, as well as the delay in the approval of the 2019 budget.

"I think yes, the delay in the approved budget has slowed expenditure, but the government will have opportunities to catch up so once it is approved, we expect a catch-up," said Bird.

The Philippines is currently operating on a reenacted budget, due to the impasse amid disagreements between the two chambers of Congress.

"I think the delays in the budget may have an impact on the first quarter, but once it's approved, the government will catch up and throughout the year it will kind of wash out and those delays will have minimal impact on growth," said Bird.

"What's important is the budget is approved, and the government can get back on its spending program," he added.

In terms of the El Nino, the National Economic and Development Authority (NEDA) last week said that this El Niño would slash a mere 0.2 percentage points from the country's full-year gross domestic product (GDP).

Earlier this week, the World Bank announced a cut in its economic growth forecast for this year and the next, also on the reenacted budget and the dry spell.

Still, ADB said the Philippines is only one of two countries, alongside Brunei, seen to continue growth expansion for this year.

Among the growth drivers cited by Bird are the rising public infrastructure spending, as well as the positive business and consumer sentiment.

Bird also noted the growth in the formal sector wage employment, sound economic policy settings, and investment climate reforms of the Philippines, as among the possible growth drivers. —LBG, GMA News