Standard Chartered, a British multinational bank, upgraded its 2016 growth forecast for the Philippines to 6.8 percent from the previous estimate of 6.4 percent, after the gross domestic product expanded 7 percent in the second quarter.
Standard Chartered managing director and chief economist for Asia David Mann said in a news briefing Tuesday the Philippines’ economic expansion would be driven by robust domestic consumption and accelerating investments, particularly on infrastructure.
The forecast for 2017 was also increased to 6.7 percent from the previous estimate of 6 percent.
GDP grew 6.9 percent in the first half this year, near the higher bound of the government’s target range of 6 percent to 7 percent this year.
“The domestic consumption remains relatively robust. Also, the government is bent on accelerating fiscal spending, especially on infrastructure,” Mann said.
Mann said the country had the potential to grow at an average of 7 percent to 8 percent annually if the economy could be further liberalized.
“The 7 to 8 percent average percent is quite achievable, especially if more infrastructure investments are in place and if the government removes [or lessen] red tape,” Mann said.
Mann also downplayed any impact of the peace and order condition in the country on the economic growth trajectory.
ING Bank Manila senior economist Joey Cuyegkeng said earlier the growth of the Philippine economy might slow down in the second half but would continue to outperform other jurisdictions in the region.
“Philippine economic growth in the second half is expected to slow but would likely beat growth of other economies in the region,” Cuyegkeng said in a report.
He said the anticipation of stronger government infrastructure spending would also support a favorable growth outlook for 2017 even as the consumption boost from income tax cuts would be eliminated with net government revenue gain from offsetting tax measures.
Economic data showed the robust election-related spending this year was one of the reasons for the strong second-quarter turnout of 7 percent. However, economists said the tapering effects of election-related expenditures would affect the economic numbers for the rest of the year.
