MANILA - The World Bank said Thursday it lowered its growth forecasts for the Philippine economy, citing the delayed passage of the 2019 national budget and the government's spending ban on new projects before the May midterm elections.
Gross domestic product will likely grow by 5.8 percent this year instead of 6.4 percent, World Bank senior economist Rong Qian said in a statement. Government had set a growth target of 6 percent to 7 percent this year.
The country's growth is expected to recover to 6.1 percent in 2020 and 6.2 percent in 2021 if there is no delay in the passage of the 2020 national spending plan, the World Bank said.
The Philippines' revenue collection, meantime, has improved due to the first tax reform package, but its disbursement "remains disappointing," it added.
The country also continues to suffer from a lack of competition, it said.
“Philippine manufacturing markets are more concentrated than those of regions peers, with a higher proportion of monopoly, duopoly, and oligopoly markets," Qian said.
The World Bank also urged government to review state-owned businesses as it said at least 11 out of 17 non-infrastructure sectors surveyed is controlled by government.
Resuming the fast pace infrastructure expansion and human capital spending are key to "regain higher growth momentum," World Bank country director for Brunei, Malaysia, Thailand and Philippines Mara Warwick said in a separate statement.
Strong private consumption due to lower inflation, the country's high employment rate, "robust" remittances, rising wages and recovery in public investment spending "will keep the economy buoyant," the statement said.
A 6 percent GDP growth this year is still "reachable" due to household consumption spending and cooling inflation, Socioeconomic Planning Secretary Ernesto Pernia told ANC on Sept. 27.
Inflation slowed further in September at 0.9 percent.