IMF to raise Philippine growth forecast

MANILA, Philippines – The International Monetary Fund (IMF) is set to raise the country’s economic growth projection for 2016 after a stronger than expected growth in the second quarter.

IMF resident representative Shanaka Jayanath Peiris said the multilateral lender is set to raise the country’s gross domestic product (GDP) growth forecast.

The economy grew seven percent in the second quarter from the revised 6.8 percent in the first quarter on the back of election-related spending.

This brought to 6.9 percent the GDP growth in the first half from 5.5 percent in the same period last year.

“The second quarter GDP outturn in the Philippines was somewhat faster than anticipated in our six percent growth forecast for 2016. Therefore, we will mostly likely be revising up our growth forecast for the Philippines in the next round of revisions,” Peiris said.

Last July, the IMF retained the country’s GDP growth forecast at six percent amid the external headwinds brought about by the volatile global financial markets.

IMF mission head Chikahisa Sumi earlier said the Philippines is likely to survive the impact of the volatility in the global financial markets.

Sumi said the Philippine economy has performed well but there is still room to do even better. “The Philippine economy is doing very strongly despite external headwind of the trade slowdown and the added market volatility and the recent Brexit,” Sumi said.

Despite the strong growth, inflation remained manageable and is still below the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP). Inflation averaged  1.4 percent in the first seven months of the year after hitting 1.9 percent in July.

IMF welcomed the plan of Duterte administration to raise the budget ceiling to three percent of GDP instead of two percent of GDP to be able to increase infrastructure spending.

The 10-point reform agenda of President Rodrigo Duterte, according to IMF, would anchor policy formulation and structural transformation over the medium term.

“The continued solid growth in 2016, despite the external headwinds, is due in part to fiscal stimulus and supporting monetary conditions,” Sumi said.

The IMF mission said the seven to eight percent GDP growth would be attainable for the Philippines.

The Development Budget Coordination Committee (DBCC) recently lowered the GDP growth projection for the Philippines to a range of six to seven percent instead of 6.8 to 7.8 percent this year.