MANILA, Oct. 11 (Xinhua) -- The Philippine economy is projected to expand by 6 percent this year and 6.4 percent in 2020, a regional think tank ASEAN+3 Macroeconomic Research Office (AMRO) said on Friday.
According to its latest assessment, AMRO said the Philippine economy is expected to recover from a soft patch in the first half of 2019 as the government ramps up fiscal spending.
"We expect the Philippine economy to expand by 6.0 percent in 2019 and 6.4 percent in 2020 respectively, marking a rebound from the slowdown caused by the budget delay and spending freeze before the mid-term election," said AMRO Lead Economist Siu Fung Yiu.
The latest 2019 forecast was based on preliminary assessment during its annual consultation visit to the Philippines from Sept. 30 to Oct. 9, according to AMRO.
Despite a slowdown to 5.5 percent in the first half of 2019, AMRO said the country's ramp-up in fiscal spending, especially on infrastructure investment, will support stronger economic growth moving forward.
AMRO said inflation is expected to continue to stay within the 2 to 4 percent target range for 2019 and 2020, as global oil prices and domestic food prices are likely to be contained and demand pressure to remain subdued.
According to AMRO, the current account deficit is likely to widen in the second half of 2019 with the pick-up in investment and growth. Even so, it said the full-year current account deficit is expected to be lower in 2019 than in 2018.
The easing bias of major central banks globally will help sustain capital inflows, AMRO said, adding that the banking system remains sound with stable capitalization and liquidity.
"The government's commitment to prudent fiscal discipline will help contain debt accumulation, while fiscal reforms will continue to improve revenue mobilization capacity," AMRO said.
AMRO further said the main short-term risks facing the Philippine economy stem from external sources.
It warns that the uncertainties could also exacerbate the current slowing global economy and raise global market volatilities.
"Macro-economic policies should focus more on supporting growth amid headwinds from a slowing global economy," AMRO said.
Despite the challenging external environment, AMRO said the current wave of reconfiguration of global supply chains also opens a window of opportunities.
"The Philippine authorities should continue to push forward key reforms and ensure effective implementation of ongoing reforms to lay a good foundation for long-term sustainable development," AMRO added.
The ASEAN+3 region comprises the 10 Association of Southeast Asian Nations (ASEAN) member states, China, Japan and South Korea.
AMRO is a regional macroeconomic surveillance organization that aims to contribute to securing the macroeconomic and financial stability in the ASEAN+3 region.