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PH GDP growth seen slowing to 6.1%

PH GDP growth seen slowing to 6.1%

The Washington-based Institute of International Finance (IIF) sees Philippine economic growth slightly slowing down this year even as overall debt as a share to the economy declined last year.

In its April 5 Capital Flows Report titled “The EM Positioning Overhang,” the IIF projected the Philippines’ gross domestic product (GDP) to grow 6.1 percent this year, a slower pace than the three-year low expansion of 6.2 percent last year.

The IIF’s 2019 growth forecast for the Philippines was within the government’s downgraded 6-7 percent target range.

To recall, the Cabinet-level, interagency Development Budget Coordination Committee (DBCC) last month slashed its 2019 growth goal to 6-7 percent from 7-8 percent previously, taking into account the impact of the delayed implementation of the 2019 national budget and the prolonged dry spell due to El Niño.

For 2020, the IIF expects the Philippine economy to expand by 6.2 percent, below the government’s also downgraded 6.5-7.5 percent target for next year.

Among the seven emerging markets included in the IIF report, the Philippines was expected to post the third fastest growth rate this year, after India’s 6.9 percent and China’s 6.3 percent.

The IIF projected Indonesia’s GDP to grow 5.1 percent in 2019; Malaysia, 4.6 percent; South Korea, 2.6 percent; and Thailand, 3.7 percent.

For next year, the IIF’s GDP growth forecast for the Philippines matched China’s 6.2 percent, and only behind India’s 7.4 percent.

In a separate April 2 Global Debt Monitor report titled “Slowdown in 2018-Pause or Trend?” the IIF noted that the share of debt to GDP in the Philippines last year declined across all four sectors it measured.

Households’ debt as a share to GDP eased to 15.3 percent in 2018 from 15.9 percent in 2017.

The debt-to-GDP ratio of nonfinancial corporates also declined to 61.5 percent last year from 62.8 percent in the previous year.

Government debt also slightly decreased to 39.8 percent of GDP in 2018 from 2017’s 39.9 percent.

As for the financial sector, the debt ratio went down to 11.2 percent of GDP last year from 11.5 percent in 2017.

Among 10 Asian emerging markets that also included China, Hong Kong, India, Indonesia, Malaysia, Pakistan, South Korea, Singapore and Thailand, the Philippines’ 2018 households debt ratio was the third lowest; nonfinancial corporates, fifth lowest; government debt-to-GDP, fourth lowest; and of the financial sector, fourth lowest.

According to its website, the IIF is “the global association of the financial industry” with nearly 450 members from asset managers, central banks, development lenders, commercial and investment banks, hedge funds, insurance firms, and sovereign wealth funds across 70 countries.