The Philippine economy is expected to grow over 6 percent in 2016 and the near term, according to an economist from a Swiss financial institution. Mark Matthews, head of research Asia at private Swiss Bank Julius Baer, said in an interview that above 6 percent growth three years in a row would make the country’s economy one of the fastest-growing in the region, potentially beating China.
The Philippine economy is considered to be “fairly resilient,” supported by strong domestic consumption that is driven by a robust business process outsourcing (BPO) industry, remittances from Filipinos working abroad, election spending and a growing middle class. Matthews named consumption as the major driver of economic growth, saying that investments are “just going half speed.”
He added that government spending will boost the gross domestic product (GDP) forecast even further. The government has allocated 5 percent of the GDP (about P760 billion of the P3 trillion national budget this year) for infrastructure. Matthews stressed that whoever wins the elections “will turn out okay,” and investors will simply wait for uncertainty to subside.
Last year, domestic demand and private investments supported a GDP growth of 5.8 percent. The figure missed the official 7 to 8 percent target and was lower than the 6.1 percent posted in 2014. The government is optimistic this year, expecting the economy to expand by 6.8 to 7.8 percent despite China’s slowing growth, dropping global oil prices and other economic uncertainties. Meanwhile, the International Monetary Fund and Asian Development Bank expect the Philippine economy to grow 6.2 percent and 6 percent, respectively, due to a challenging external environment.