MANILA – Citing price increase on basic goods and slower government spending, the Asian Development Bank (ADB) lowered its growth forecast for the country this year and the next.
Released on Thursday, the updated Asian Development Outlook 2014 report indicated that the county’s gross domestic product (GDP) might expand by 6.2 percent this year.
The said figure is lower as compared to previous forecast at 6.4 percent.
“The slightly lower growth is due largely to a slowdown in government spending, which grew 0.9 percent in the first half of 2014, compared to 11.1 percent in the same period last year. The slowdown came off a high point in 2013, election year, but also reflects caution among government agencies amid concerns about the misuse of public funds,” the ADB said in a statement.
ADB, a Manila-based multi-lender also warned that the country’s economic growth may not be sustained in the long run if the next president will not continue the reforms started by the Aquino administration.
Meanwhile, ADB’s forecast for 2015 dropped from 6.7 percent, as predicted in a forecast released last April, to 6.4 percent, announced recently.
This slower growth is attributed to the congestion at Manila’s ports which was further aggravated by the truck ban implemented by the Manila City government from February to early this month, according to the ADB country director for the Philippines Richard S. Bolt.
ADB, however, said that despite the forecast, the country will still experience robust growth similar to its neighboring Asian countries.
“Consumption and investments remain strong, and exports are recovering,” Bolt noted.
He further added the government should upgrade infrastructure investment, place measures to improve competition, and make financing increasingly available in order to sustain economic gains.
“We expect more inflows of FDI into the Philippines, although still lower than its neighbors in the region,” Bolt said.