News Analysis: IMF raises growth forecast for Philippines but study shows income gap widens

MANILA, Philippines (Xinhua) - The International Monetary Fund ( IMF) has again raised its growth forecast for the Philippines this year to 7 percent, which is the high-end of the 6-7 percent growth forecast of the government for 2013.  

In media briefing on Wednesday, Shanaka Peiris, IMF's resident representative for the country, said that the Philippine economy relied heavily on domestic demand rather than export revenues that fuel the economies of neighbors like Malaysia, Thailand and Singapore.   "This showed that the country was one of the few emerging markets that could better cope with current global economic conditions,"Peiris said.

The Philippines, the IMF said, remains one of the few bright spots in the global economy, with domestic demand fueled by remittances from migrant workers and increased government spending expected to offset the slowdown in the developed world.

Remittances from overseas Filipino workers (OFWs), which the IMF expects to grow by 5 percent this year, also remain stable, fueling domestic demand.

OFW remittances are expected to reach $22.5 billion this year. Remittances from the country's 10 million migrant workers are the Philippines' biggest source of foreign exchange, which protects the economy from any sudden shortage of cash from overseas.

Amidst this positive assessment on the Philippines by the Washington-based multilateral financing institution, officials of the government of President Benigno Aquino III cannot seem put their act together on the question of whether the country's robust economic growth has reduced poverty or narrowed the gap between the rich and the poor.

A paper, written by Secretary General Jose Ramon Albert of the National Statistical Coordination Board (NSCB), detailed the country's national income accounts that supported the perception that the benefits of the robust economy were enjoyed more by the rich than the poor.

The NSCB is a government agency under the National Economic and Development Authority (NEDA), the highest economic policy-making body of the government.

The paper confirmed that gap between the country's rich and poor is widening, with high-earning individuals enjoying significantly faster growth in incomes compared with people from the middle- and low-income classes.

Albert said that people from the high-income class, which account for between 15.1 and 15.9 percent of the country's population, enjoyed a 10.4 percent annual growth in income in 2011. The study used data covering 2010 and 2011.

In contrast, incomes of people in the middle-income segment grew by only 4.3 percent and incomes of those in the low-income group by 8.2 percent.

But Malacanang, the seat of the Philippine government, on Wednesday debunked the findings of one of its own agencies, saying that poverty is not widespread and the gap between the rich and poor in the country has not widened.  

"I'm not sure if that's correct. There has been growth even in the lowest levels," Presidential Spokesman Edwin Lacierda said at a briefing, disputing the conclusion of an NSCB study.  

Lacierda pointed to the continued increase in the income levels of Filipinos belonging to the middle class.   "For instance, there's a growth (in income) of 8 percent in the lowest level; 4.3 percent in the middle income; and, from the high (income individuals), it is about 10 (percent). All those growths, if you notice, are above inflation rates. Inflation is 3. 2 (percent). There's real growth even in the low level," he said.

This was the second time that the Aquino administration questioned data from the NSCB, which are based on official statistics.  

In April this year, President Aquino himself doubted the veracity of poverty statistics released by the NSCB that indicated that economic growth had hardly made a dent in poverty incidence in the country.

The NSCB reported that the poverty incidence stood at 27.9 percent in the first semester of 2012 - a level that was " practically unchanged" from the same period in 2009 (28.6 percent) and 2006 (28.8 percent).

Lacierda insisted that the Aquino administration was pursuing its"inclusive growth" policy but added that"it's not going to happen overnight."  

Meanwhile, the Bangko Sentral ng Pilipinas, the country's central bank, announced Wednesday that foreign direct investments (FDIs) to the country reached a net inflow of $202 million for April, up 61 percent year-on-year.

The net inflow for April was a reversal from the $78 million in FDI capital that left the country the month before.

This brought the year-to-date level to a net inflow of $1.5 billion, roughly just slightly lower than the level in the same four-month period in 2012.