* WB keeps 2016 growth f'cast for Philippines at 6.4 pct
* Philippines could surpass f'casts on infra spending
* WB sees medium-term policy challenges for Philippines
MANILA, Oct 3 The Philippines' economic growth
could exceed the World Bank's projection of 6.2 percent for the
next two years if President Rodrigo Duterte's administration
further ramps up infrastructure spending as planned, the lender
said on Monday.
But the three-month-old government faces policy challenges
or risks, such as the need to dispel lingering uncertainty about
its policy priorities, deliver on its fiscal reform programme,
and accelerate structural reforms to reduce poverty, it said.
"The Philippines' short-term growth prospects remain
positive despite a number of medium-term risks and policy
challenges," the World Bank said in its Philippine Economic
The bank kept its 2016 GDP growth forecast for the
Philippines unchanged at 6.4 percent and described its 6.2
percent growth projection for 2017 and 2018 as "a conservative
forecast with significant upside risks."
World Bank economist Birgit Hansl said recent volatility in
local financial markets was normal because lingering uncertainty
over the administration's reform agenda could be expected to
make investors cautious.
"That's why it's such an important short-term policy
priority to dispel the uncertainty, to just say, 'look, we mean
business, this is what we're going to do'," she told a media
The Philippine peso last week hit a seven-year low against
the U.S. dollar and foreign investors have dumped local stocks
in recent weeks partly because of concerns about Duterte's
anti-American rhetoric and bloody anti-drug campaign.
The lender made no direct comment on drug-related killings
and Duterte's foreign policy, or the likely impact of such
issues on economic growth prospects.
Last month Standard & Poor's said it was unlikely to give
the Philippines a credit rating upgrade in the next two years,
citing Duterte's unpredictability and uncertainty over his
domestic and foreign policies.
S&P also raised the possibility it might downgrade the
Philippines' rating if the new government fails to sustain the
country's fiscal and economic gains.
Hansl said the World Bank's outlook for the Philippines was
"quite stable with real upside risk because we cannot see major
policy reforms, or any policy reforms, at the moment that
indicate there would be a discontinuity in these policies."
The government has promised to ramp up infrastructure
investment particularly in the countryside to build more roads,
bridges and airports and to spur investment and reduce poverty
in rural areas.
(Reporting by Enrico dela Cruz; Editing by Eric Meijer)