By Chino S. Leyco
The World Bank (WB) slashed its economic growth forecast for Philippines to below government’s target this year amid unfavorable external environment and domestic challenges brought by the delayed implementation of the national budget.
Based on the World Bank’s Philippines Economic Update, the Washington-based lender expects the country’s gross domestic product (GDP) to grow by 5.8 percent this year, slower than its earlier projection in April of 6.4 percent.
According to the World Bank, the economy, which the Duterte administration expects to grow by 6.0 percent to 7.0 percent this year, has “weakened” amid slower investment growth.
World Bank said the economy was hampered by the delayed approval of the 2019 national budget, and the adverse impact of global developments, including weak global manufacturing activity and trade, as well as heightened uncertainty from escalating trade tensions.
“The Philippines faces heightened external risks due to the slowdown in global growth and demand, and rising global protectionism, which weaken external demand for the country’s main exports,” World Bank said.
“Domestically, a slow recovery in the pace of public investment spending constitutes the main downward risks, as capacity constraints, procurement difficulties, and implementation bottlenecks continue to slow the pace of public spending,” it added.
The bank, meanwhile, said the government must work in ensuring that complementary reforms under the comprehensive tax reform program would continue for revenue generation as fiscal expansion is crucial to guarantee the nation’s long-term fiscal sustainability.
“Fostering high-quality job creation and boosting human capital investment will enhance the impact of economic growth on poverty reduction and shared prosperity,” World Bank said.
“To increase the growth impact on poverty and inequality, targeted investments and supportive business regulations are needed in industries and sectors that generate high-quality jobs,” the bank added.
Likewise, World Bank said that human capital investments in education and health must be fortified, including training and skills development, which will be needed for workers to stay competitive in a fast-changing global work environment.
Finally, improving social-protection programs, including the Pantawid Pamilyang Pilipino Program also known as 4Ps will support the incomes of poor households and help build their resilience against adverse shocks.
However, the bank the slowdown is just temptation and it is projecting that the economy would inch up next year to 6.1 percent, before hitting the 6.1 percent level in the succeeding year.
“Philippine economic growth is expected to gradually accelerate in 2020-2021 as global growth is expected to improve and as the domestic policy environment remains supportive of the economy,” World Bank said.