Growth forecast cut on export slowdown

ADB revises forecast for Philippines to 5.9% this year

The Asian Development Bank (ADB) has revised downward its growth forecast for the Philippines this year because of a slowdown in exports, but maintained its projection for 2016.

In a supplement that updated its 2015 Asian Development Outlook, the bank said the Philippine gross domestic product (GDP) is projected to grow 5.9 percent this year, a slight decrease from the 6-percent outlook released in September.

The growth forecast for 2016 is maintained at 6.3 percent, the bank said in a statement posted on its website.

The updated report, released last week, said net external demand in the Philippines weighed on GDP growth in the first three quarters of this year.

The “unexpectedly sharp drop” in net external demand reflected the brisk expansion in imports on strong domestic demand and only a modest rise in merchandise exports.

The government reported a 6-percent GDP growth in the third quarter due to strong domestic demand, bringing growth in the first nine months of the year to 5.6 percent.

The new report noted that private investment in the Philippines recorded robust expansion, while household spending was supported by higher employment, low inflation, and remittance inflows from Filipino workers overseas.

Government expenditure accelerated rapidly, with public expenditure rising by 41.2 percent in the third quarter as budget execution was enhanced.

But net external demand decreased, prompting a corresponding downward revision in the GDP growth forecast.

“On the supply side, services and manufacturing were the key growth drivers. Services generated two-thirds of GDP growth in the first three quarters, spurred by transport, communications, retail trade, business process outsourcing, and real estate,” the ADB report stated.

“Manufacturing generated nearly one-fourth of the increase in GDP, supported by domestic demand. Agricultural output was nearly flat in the first three quarters as El Niño brought drought,” the report added.

The ADB also revised downward its growth projections for Indonesia and Singapore, but said the combined GDP growth across Southeast Asia is still on track to reach 4.4 percent in 2015 and 4.9 percent in 2016.

“Southeast Asia as a whole is maintaining its growth pace despite marginal downward revisions for Indonesia, the Philippines, and Singapore,” the bank said in a statement.

The bank also maintained its forecasts for Asia at 5.8 percent for this year and 6 percent for next year.

“Despite some softening in prospects for the major industrial economies, developing Asia is poised to meet growth forecasts published in September in the Asian Development Outlook 2015 Update,” the bank added.

China’s economy, meanwhile, is seen to pick up, with ADB revising its outlook to 6.9 percent from 6.8 percent in September.