DUBAI: The World Bank on Thursday downgraded its growth forecasts for the Philippine economy and the wider East Asia Pacific region as a weakening global economy, rising protectionism and the lingering US-China trade spat tempered expectations.
The Philippines will likely miss its 6 percent to 7 percent growth target for 2019, the Washington-based lender said as GDP would expand at a slower 5.8 percent this year versus the 6.4 percent it earlier forecast.
The slowdown in Manila’s economic growth, according to the global lender, are largely due to the delay in the passage of this year’s national budget as well as the government spending ban on new projects prior to the May midterm elections.
World Bank senior economist Rong Qian, in a statement, however said the ‘Philippine economy remains strong’ as growth would rebound to 6 percent in 2020 and 2021 particularly if next year’s national expenditure plan gets swift legislative approval.
“[The] timely passage of the 2020 budget and decisive action on the country’s tax reform program will remove uncertainties and help the private sector make timely decisions, boosting job creation,” Mara K. Warwick, the World Bank country director for Brunei, Malaysia, Thailand and the Philippines, also said in the statement.
Meanwhile, economic growth in the East Asia Pacific would slow to 5.8 percent in 2019 from 6.3 percent last year due as the heightened uncertainty involving the US-China trade tiff – which resulted to a pull-back in exports and investment growth – test the resilience of the region.
Regional growth as also downgraded to 5.7 in 2020 and 5.6 percent in 2021, respectively, from Bank’s previous assessment.
The World Bank noted that “downside risks to the region’s growth prospects have intensified. Prolonged trade tensions between China and the United States would continue to hurt investment growth, given high levels of uncertainty.”
“A faster-than-expected slowdown in China, the Euro Area and the United States, as well as a disorderly Brexit, could further weaken the external demand for the region’s exports.”