The Asian Development Bank (ADB) expects the Philippines to remain one of Southeast Asia’s fastest-growing economies in the next two years on the back of strong domestic demand and government’s rollout of more infrastructure projects.
In its latest Asian Development Outlook (ADO) 2018 released on Wednesday, ADB projects the country's gross domestic product (GDP) growth at 6.8 percent this year and 6.9 percent in 2019, up from 6.7 percent last year.
“The Philippine economic growth is indeed very strong and is driven by robust domestic demand. I see this a period for the Philippines like a golden age of growth, growing at this pace for several years, and it is the longest economic expansion for 40 to 50 years,” said Kelly Bird, ADB Country Director for the Philippines, in a media briefing.
Bird believes that key reforms put in place to support the government’s infrastructure program will sustain growth over the medium term.
“We expect this growth to further lift wage employment numbers, add to household incomes, and benefit more poor families across the archipelago,” he said.
The Philippines has embarked on a massive infrastructure program worth USD 160 billion to USD 180 billion from 2017 to 2022, called “Build Build Build.”
Under the program, public infrastructure spending is targeted to increase from 4.5 percent of GDP in 2016 to 7.3 percent by 2022. Public spending on infrastructure was estimated to have reached 5.4 percent last year.
The ADB projects services will continue to drive economic growth this and next year, along with manufacturing and construction industries.
It said the Tax Reform for Acceleration and Inclusion (TRAIN) law, the first phase of government’s comprehensive tax reform program, will augment tax revenues and provide additional fiscal space for more progressive public spending.
“The law is projected to yield PHP90 billion in additional revenue in 2018 and PHP144 billion in 2019. Further augmentation of tax revenue is anticipated as the government pursues succeeding phases of comprehensive tax reform,” the Bank said.
Meanwhile, the ADB projected the country’s inflation to reach 4 percent in 2018 as global oil and food prices rise and higher excise taxes on some commodities take effect.
Inflation is expected to marginally decline to 3.9 percent next year.