MANILA -- The Asian Development Bank (ADB) has maintained growth forecast for the Philippines for this year and 2018, on the back of the government’s aggressive infrastructure push and implementation of tax reform.
In an update to its flagship annual economic publication, Asian Development Outlook (ADO) 2017, published on Tuesday, the Bank said the Philippine gross domestic product (GDP) will still grow 6.5 percent in 2017, and 6.7 percent next year.
“A strong focus on infrastructure investment and implementation of tax reform will see the country continue its growth momentum through 2018,” said Richard Bolt, ADB Country Director for the Philippines.
“The concerted effort by the Philippine government to improve public project implementation is bearing fruit, as public investment programs help drive continued economic expansion,” he said.
Aekapol Chongvilaivan, Country Economist for the Philippines at the ADB, cited the estimated financing requirement for the country’s ambitious infrastructure program at USD160 billion to USD180 billion for the next six years.
The administration has earmarked PHP847.2 billion in its 2017 national budget for infrastructure projects, equivalent to 5.3 percent of GDP, from previous 3.3 percent.
”This is very commendable. Even that 2 percent of GDP increase in public infrastructure spending is tremendous,” he said in a press briefing.
Chongvilaivan said the ADB is working closely with the Philippine government to boost the capacity to prepare and implement the infrastructure projects.
The ADB is also banking on the implementation of comprehensive tax reforms and higher public investments in social services to sustain strong growth over the next two years.
The first package of tax reform measures, likely to be approved within the year, includes excise tax increases for automobiles and gasoline, broadening the value-added tax base by limiting exemptions and lower personal income tax rate which would boost domestic demand.
“We have to make sure that in net terms, people have more purchasing power,” Chongvilaivan added.
The Philippine economy expanded by 6.4 percent in the first half of 2017, a moderation from the election-driven 7-percent pace a year earlier. (PNA)