Asean+3 Macroeconomic Office (AMRO) economists meet with Philippine authorities led by Bangko Sentral ng Pilipinas Deputy Governor Francisco Dakila and Finance Asst. Secretary Maria Teresa Habitan in Manila. AMRO PHOTO

The Singapore-based international organization ASEAN+3 Macroeconomic Research Office (AMRO) believes the Philippine economy will recover from a soft patch during the first semester of 2019 as the government begins to unload funds.

The organization said Philippine macroeconomic policies should focus on supporting growth amid headwinds from a slowing global economy.

In a statement released shortly before midday today, AMRO said it had conducted its Annual Consultation Visit to the Philippines from Sept. 30 to Oct. 9,2019.

The mission was chaired by AMRO Lead Economist Siu Fung Yiu. Director Toshinori Doi and Chief Economist Hoe Ee Khor also took part in key policy meetings that focused on prospects of the economy, challenges ahead and policy responses.

“We expect the Philippine economy to expand by 6.0 percent in 2019 and 6.4 percent in 2020, marking a rebound from slowdown caused by the budget delay and spending freeze before the mid-term election,” said Yiu.

He said heightened uncertainties in the external environment could exert further pressures on Philippine growth and prompt financial market volatility.

“Policies should be calibrated to address these challenges,” he said.

Despite a slowdown to 5.5 percent in the first half of 2019, the recent ramp-up in fiscal spending, particularly in infrastructure investment, will support stronger economic growth, AMRO said.

AMRO also said inflation was expected to continue to stay within the 2-4 percent target range for 2019 and 2020, as global oil prices and domestic food prices were likely to be contained and demand pressure likely to remain subdued.

It projected the current account deficit to widen in the second half of 2019 with the pick-up in investment and growth. 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, it said, and the banking system remains sound with stable capitalization and liquidity.

The government’s commitment to prudent fiscal discipline will help contain debt accumulation as fiscal reforms will continue to improve revenue mobilization capacity, AMRO said. (Melo M. Acuña)