The World Bank remains firm in its forecast that the Philippine economy will most likely grow by 6.4 percent this year, according to its Global Economic Prospects report released early January. The projected economic growth cites public-private projects speedy implementation and government spending for the May 2016 Presidential Elections among the leading signifiers.
The country ranks third next to Vietnam’s 6.6 percent growth forecast and China on the number one spot with 6.7 percent. This 6.4 percent forecast is lower than the 7-8 percent goal set by the government.
The report states that the Philippines and Vietnam are among East Asia’s countries with the strongest growth prospects for 2016. “Growth in the Philippines and Vietnam will benefit from rising household incomes caused by low commodity prices, a diversified and competitive export base (in Vietnam) and investment driven by robust FDI (Foreign Direct Investment) flows.” Yet, the report notes that the Philippines’ FDI flows show notable lag, which is partly blamed on regulatory restrictions.
For next year and 2018, World Bank’s forecast growth for the Philippines is only at 6.2 percent.
World Bank notes in its report some risk factors that can hinder economic growth such as –
- Greater volatility of the financial market and restricted credit
- Vertical appreciation of the US dollar value and slower performance of high-income economies
“The region is expected to benefit from the strengthening recovery in advanced economies, low energy prices, improved political stability and continued favorable conditions in global financial markets, despite anticipated monetary policy tightening in the United States,” according to World Bank.