DUBAI: The Philippine economy will remain strong despite rising global uncertainty and inflationary pressures, the World Bank said in its the Philippines Economic Update released on Thursday.
“The Philippine economy is poised to remain strong and is projected to grow at 6.5 percent in 2018, 6.7 percent in 2019, and 6.6 percent in 2020,” the multilateral lending agency noted, despite a slowdown during the first half because of weaker electronics exports and lower farm output due to unfavorable weather conditions.
Rising government expenditure for infrastructure should provide the momentum for the Philippine economy to speed up in the second half of 2018 and in early 2019, while private consumption growth, which accounts for about two-thirds of total economic growth will remains strong despite an increase in consumer prices, it added.
“Private consumption is projected to remain strong, supported by a steady labor market, continuous inflow of remittances, and inflation easing,” Rong Qian, World Bank senior economist, said.
Philippine monetary authorities have increased the policy rate four times while measures have been implemented to the ease the importation of food on efforts to manage inflation, which reached 6.4 percent in August. Year-to-date average inflation was at 4.8 percent, compared with 2.8 percent in the same period last year, the highest since 2008 because of a steep rise in food inflation.
“High inflation can affect the welfare of the poor and vulnerable households as they spend over two-thirds of their expenditure on food and transport. This can potentially slow progress on poverty reduction,” Qian said. “While easing up rules for importing food products can help curb inflation, addressing structural challenges in the agriculture sector can help prevent food supply constraints in the future.”
Meanwhile, Birgit Hansl, World Bank lead economist for Brunei, Malaysia, Philippines, and Thailand, commented that the Philippines “has large foreign reserves, flexible exchange-rate, low public debt, and robust remittance inflows.”
“At this juncture, preserving the country’s resilience rests in large part on preventing the current-account deficit from widening too much and too fast,” Hansl added. The Philippines’ current account deficit widened rapidly in the first half of 2018, to 1.9 percent from an average of 0.1 percent in the same period of 2017.
“Even though the Philippines’ current account deficit could be considered as a good deficit because it finances capital goods import to help close the country’s long-due infrastructure gap, and that currently FDI (foreign direct investment) is financing the CA deficit, it would be wise to monitor it closely to prevent it from widening too much and too fast, and have to rely on portfolio flows to finance the gap, which will make the country more vulnerable to external capital flows,” Qian advised.
On the wider region, outlook for developing East Asia and Pacific remains positive with growth expected to be 6.3 percent in 2018, although lower than in 2017 due to the continued moderation in China’s growth as its economy continues to rebalance.
China is expected to slow moderately to 6.5 percent in 2018, after growing faster than anticipated in 2017. Growth in developing EAP, excluding China, is expected to remain stable at 5.3 percent from 2018 to 2020, driven primarily by domestic demand.
In Thailand and Vietnam, growth is expected to be robust in 2018 before slowing in 2019 and 2020 as stronger domestic demand only partially offsets the moderation in net export growth. Indonesia’s growth should be stable, thanks to improved prospects for investment and private consumption. In Malaysia growth is expected to ease, as export growth slows, and public investment is lower following the cancelation of two major infrastructure projects.
Philippine economy to remain strong amid global uncertainty, inflation — World Bank
Philippine economy to remain strong amid global uncertainty, inflation — World Bank
- The Philippine economy is poised to remain strong and is projected to grow at 6.5 percent in 2018, 6.7 percent in 2019, and 6.6 percent in 2020
- Rising government expenditure for infrastructure should provide the momentum for the Philippine economy to speed up
SIDF finances 5k projects with over $53.3bn
RIYADH: The Saudi Industrial Development Fund has approved up to 5,000 projects — representing about 40 percent of the Kingdom’s industrial base — with a total investment value nearing SR200 billion ($53.3 billion), according to Khalil Al-Nammari, executive vice president for strategic planning and business development at the fund, who spoke to Al-Eqtisadiah.
This brought the fund’s total approved investments since its establishment in the 1970s to more than SR700 billion.
During the Vision 2030 period alone, the fund approved loans ranging between SR86 billion and SR90 billion, Al-Nammari said.
These loans attracted nearly SR190 billion in investments, highlighting the scale of expansion and growth in industrial lending and related sectors.
Repositioning within national ecosystem
Al-Nammari noted that the fund has repositioned itself within the national economic ecosystem in recent years, benefiting from the major transformation driven by Saudi Vision 2030.
He said the fund, which marked its 50th anniversary last year, has shifted from its traditional role of financing industry to a broader mandate covering industry, energy, mining, and logistics, adding that the expansion required a comprehensive strategic shift in lending mechanisms, services, and programs offered to these new sectors.
The fund launched innovative financing solutions and established the Industrial Fund Academy, which has so far trained more than 11,000 trainees from the public and private sectors.
According to the executive vice president, the scale of work and results achieved since the launch of Vision 2030 is equivalent to what was achieved over 36 years since the fund's establishment, underscoring the momentum generated by the vision and its derived strategies.
Long-term development partnership
Al-Nammari stressed that the fund's success is measured by the ability of projects to be built, operated, exported, and scaled, not only by the size of financing, pointing out that relationships with clients often extend 15 to 20 years due to the long-term nature of development loans.
On measuring development impact, Al-Nammari said economic feasibility studies, market analysis, and engineering assessments form the foundation before any loan is approved.
He added that the SIDF evaluates project performance after operations begin by monitoring financial statements, operational progress, production capacity, and sales growth, as well as export capabilities.
He added that the fund also assesses job creation and quality, all of which are indicators factored into lending decisions from the outset and monitored throughout the loan term.
As part of this effort, the fund conducts regular visits to more than 1,000 active projects in its portfolio to track construction and operational phases, assess financing needs, and provide solutions, advisory support, and academic services.
The goal is to ensure factories achieve their production targets, adhere to business plans, and enter local and global markets, contributing to industrial growth, higher exports, and greater sector contribution to gross domestic product.
New financing channels to attract capital
In the coming years, the fund will continue to focus on the sectors identified by the national strategy, spanning 12 areas, including food and pharmaceutical security, as well as future-oriented sectors such as clean energy, hydrogen, and electric vehicle components, as well as renewable energy, and supporting supply chains.
Al-Nammari said the fund has recently focused on creating new financing channels aimed at attracting capital from the private sector, banks, and investment funds.
In this context, the fund has launched the SIDF Investment Co., which holds existing commitments of SR50 million in funds and firms that support investment in the industrial sector.
Moreover, it has introduced the Supply Chain Financing program, the largest of its kind globally, aimed at providing financing solutions for the invoices of suppliers to major national companies.
The program is currently operating with firms such as Saudi Aramco and the Saudi Electricity Co., helping to support national supply chains and enhance the sustainability of small, medium, and advanced industrial projects alike.
