MANILA: The Philippine economy likely grew 7.05 percent in 2016, higher than the government’s full year growth target of six to seven percent, Moody’s Analytics said in a report released over the weekend.
The research arm of the global debt watcher said growth was driven by domestic demand. “The main driver of output growth will continue to be domestic demand, with private consumption and investment both expanding rapidly. Goods exports should also post a modest improvement compared with previous quarters because of the uptick in global demand in recent months,” Moody’s said. Moody’s also expects a 7.2 percent growth for the economy in the fourth quarter of 2016.
The Philippine Statistics Authority is scheduled to report fourth quarter GDP and full-year 2016 GDP on Jan. 26. In the first, second and third quarters of 2016, GDP grew 6.9 percent, seven percent and 7.1 percent, respectively.
“This would be the seventh consecutive quarter in which year-on-year GDP growth accelerated,” Moody’s said. Monetary authorities for their part, said the Philippine economy does not need additional stimulus to sustain growth.
In a briefing on Friday, BSP Deputy Governor Diwa Guinigundo said current monetary settings remain appropriate with the Philippine economy growing seven percent in the first three quarters of the year. On inflation, he said the BSP still expects inflation to stay within the 3.3 percent average inflation target for the year “absence of what I said would be game-changing developments for 2017.”
“We will be alarmed if there are those developments that will bring the average inflation to beyond four percent,” he said.
The tax reform package of the government which includes higher taxes for fuel and automotive – is expected to contribute an uptick in inflation of between 0.4 percent and 0.5 percentage point for 2017, Guinigundo said.
The Duterte administration is pushing for a Comprehensive Tax Reform Package to raise much needed revenues to finance its infrastructure and social protection programs.
