British bank Standard Chartered on Tuesday reduced its 2017 growth forecast for the Philippine economy to 6.5 percent, from the earlier estimate of 6.8 percent because of high base effects and slower expansion in the first quarter.
Edward Lee, the bank’s head of economic research for Asean, said in a briefing in Makati City the first-quarter growth was slower than expected, but remained fastest among Asean-6 countries, which also include Indonesia, Malaysia, Singapore, Thailand and Vietnam.
“The domestic strength will continue to push economic growth… The economy is expected to pick up in the second half,” Lee said.
The Philippine economy grew 6.4 percent in the first three months, slower than the 6.8-percent expansion a year ago, pulled down by sluggish spending. Government spending picked up in the first quarter of 2016 in the run-up to the presidential elections.
Standard Chartered said despite the lower-than-expected growth, the Philippines remained one of the fastest-growing economies in the region.
Lee also said exports would continue growing for the remainder of the year while inflation would continue to be manageable. This would encourage the Bangko Sentral ng Pilipinas to keep the policy rates steady this year, he said.
Standard Chartered said in April the Philippines was expected to grow 6.8 percent this year.
Lee said the Duterte administration’s proposed comprehensive tax reform program would be positive for the economy, which would enable the government to have extra revenues to fund development projects vital for economic growth.
“The tax reform program shows the government’s commitment for further economic growth,” Lee said.
The government expects the Philippine economy to grow between 6.5 percent and 7.5 percent this year, anchored on higher fiscal spending, robust domestic demand and investments. Last year, GDP grew 6.9 percent, near the upper bound of the target range of 6 percent to 7 percent.
The International Monetary Fund kept its 6.8-percent forecast for the Philippines this year and projected a faster expansion of 6.9 percent in 2018.