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But the lender maintains growth prospects at 6.8% in 2018 and 6.9% in 2019
Update
By Chino Leyco
Asian Development Bank (ADB) has increased its inflation outlook for the Philippines amid staggering consumer prices while keeping its economic growth forecast for this year and next year.
Based on the 2018 ADB Supplement released on July 19, 2018, the Manila-based lender expects consumer price inflation to rise to 4.3% this year, faster than previous forecasts of 4.0%.
"Increased excise taxes on fuels and certain products under the Tax Reform Act for Acceleration and Inclusion (TRAIN) The bank maintained its forecast of Inflation for next year to 3.9%, noting that the impact of the tax reform should be transitional and normalize in 2019.
"The ADB proposal to maintain the forecast of Inflation for 2019 at 3.9% is an upward revision of the expected monetary policy rates in accordance with the tightening of global monetary policy, "explained the ADB
. "This result combines with high expected global oil prices, the depreciation of the peso and strong domestic demand to prompt this Supplement to revise the inflation forecast for 2018 to 4.3 percent." ADO 2018 forecast of 4.0%, AfDB announced that the key rate of Bangko Sentral ng Pilipinas (BSP) increased by 50 basis points in May and June, thereby reducing the repurchase rate day-to-day at 3.5
The central bank also raised in February its inflation forecast for this year to 4.3%, exceeding the projected range of 2.0% to 4.0% Meanwhile, the AfDB has maintained its Gross Domestic Product (GDP) forecast for 2018 and 2019 on forecasts of increased investment and domestic consumption.
"Public spending on social services and to the infrastructure will be supported by better budget execution and u no longer large revenue mobilization. "As part of the ongoing tax reform, a reduction in personal income tax for the majority of the workforce will boost disposable income and consumption," the bank added. With these assumptions, the AfDB has said it will keep growth prospects at 6.8 percent for this year and 6.9 percent next year.
The AfDB's projections are however slower than the target of the administration Duterte from 7.0% to 8.0% During the first three months of the year, the The country's economy grew by 6.9% and industry grew the fastest, at 7.9%, while services continued to grow strongly by 7%.
In agriculture, meanwhile, slowed down to 1.5 percent.
"Sustained growth was attributed mainly to the acceleration of government infrastructure development spending and other programs to develop human capital." Public construction increased by 25.1% in first quarter and public consumption of 13.6%.
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