Consumption, govt spending, FDI rise: 3 legs of growth in 2019
THE Philippine economy will bank on three legs to sustain the economic growth achieved in 2018 going to 2019.
“The Philippine economy will be powered by rise in consumption expenditure, government spending and the rise in foreign direct investment. What happened in 2018 will pave the way for the recovery of the economy in 2019,” Jose Domingo M. Santiago III, executive director and head of equity research, UBS Philippines, said in a press briefing on Wednesday in Makati City.
Santiago also pointed out that 2019 will be reversing the market trends as the economy is set to rebound this year. He added that inflation rates are expected to drop this year. “The rise in Interest rates drives less interest in the stock market,” he said. With falling interest rates, the market bounces back, according to Santiago.
The September 2018 inflation rate was the highest for the Philippines in the past nine years, registering 6.7 percent, according to the Philippine Statistics Authority. An economist stressed that inflation is caused both by local and global factors such as the rise in the price of crude prices in the global market. Being an importer of crude oil, the Philippines suffers from the volatility of the oil prices in the world market.
He said the Duterte administration’s “Build, Build, Build” program is going to play an important role in the growth of the economy this year. Hailed as the biggest infrastructure development program the country has undertaken, the $180-billion program seeks to transform the country’s archaic infrastructure system to a modern system that seeks to be on a par with, if not better than its neighbors in the Association of Southeast Asian Nations (Asean) region.
The government has lined up 75 flagship projects, which include six airports, nine railways, three bus rapid transits, 32 roads and bridges, and four seaports.
These all aim to reduce the cost of production, boost rural income, entice investments in the rural areas, increase the efficiency in the movement of goods and services, and generate more jobs.
Edward Teather, executive director and senior economist for Asean and India, said inflation rates in the country will now be steadier, allowing for a recovery in consumption. “That is important as it makes the growth in Southeast Asia,” he said.
Moreover, he said the Philippines is one of the fastest-growing economies in Asia, posting 6.2-percent GDP growth for 2018, and 6.1 percent in the fourth quarter. However, Teather pointed out that more mature economies like Thailand and Malaysia will decelerate in 2019 because of the economic slowdown in China.
He said there will be more pain in the disruption in the early stage as the countries will avoid the tariffs.