The Philippine economy will be the fastest-growing economy in the Southeast Asian region for 2014 and 2015, the Asian Development Bank reported Tuesday.

ADB’s Asian Development Outlook 2014 (ADO) forecast that the country’s gross domestic product growth rate in 2014 and 2015 will be by 6.4 percent and 6.7 percent, respectively.

Its GDP growth rate for two years is higher than that of other ASEAN member states.

ADB Senior Economist Akiko Hagiwara said GDP growth of Indonesia will grow at 5.7 percent in 2014 and 6.0 in 2015; Vietnam at 5.6 percent in 2014 and 5.8 percent in 2015; Malaysia at 5.1 percent in 2014 and 5.0 percent in 2015; Singapore at 3.9 percent in 2014 and 4.1 in 2015; and Thailand at 2.9 percent in 2014 and 4.5 percent in 2015.

The ADO 2014 report on Philippine economy also said, the strong economic performance of the country will be pushed by private consumption benefiting from remittance inflows and positive consumer sentiment this year.

Sectors of construction, business process management (BPM), tourism, manufacturing, and government spending are set to support the positive outlook for the country’s GDP growth.

Activities in the constructions sector are seen to increase this year after rapid growth in building approvals, ADO 2014 reported. There are also strong demand specifically in segments of office space, shopping malls, and housing.

The ADB outlook has also expected the services sector like BPM and tourism to contribute growth on the Philippine economy in 2014 to 2015 as BPM sector revenue increased by 16 percent to US$ 15.5 billion last year and the 15.1-percent increment in tourism revenue to an estimated US$ 4.4 billion in the same year.

“From the production side, manufacturing is expected to perform well during the forecast period, underpinned by robust domestic demand and an improvement in exports as demand picks up in the US and the euro area,” the ADB said.

”The pace of increase in government spending is also expected to ease from 2013,” ADB said adding the trend in improving spending of public funds resulted from the government’s effort of becoming more cautious in disbursement of funds after the public has raised concerns in alleged misuse of some government budget.

The ADB reported that the Philippines will continue to benefit from the growing investment confidence in it.

The ADO 2014 also saw that the rehabilitation and reconstruction in typhoon-stricken areas may not have a significant impact on the country’s economy until late in 2014 and 2015.

”The direct and timely transfer of national government resources to local governments and affected communities has been hindered by highly centralized national government systems. Also, regional and local administrations have limited capacity to implement reconstruction and rehabilitation programs,” the outlook report said.

It ADB also mentioned that a risk that inflation expectations could build if M3 liquidity continues to increase.

The Bangko Sentral ng Pilipinas has announced that, effective this month, bank reserve requirement will increase in order to guard against the risks from strong liquidity growth and rapid credit expansion.

Another risk to the outlook for Philippine economy is the national election that will take place in 2016.

”Investors could become increasingly cautious until the new government clarifies policy directions. Steady progress on reform will be important to sustaining market confidence,” the ADB said.

The ADB also urged the Philippines to translate this strong economic growth to poverty reduction by pushing inclusive growth and providing more jobs for the Filipinos.*PNA

back to top