IMF keeps Philippines growth forecasts

MANILA, Philippines - Multilateral lender International Monetary Fund (IMF) is keeping its economic growth forecasts for the Philippines for the meantime despite the disappointing gross domestic product (GDP) growth in the first quarter.

Shanaka Jayanath Peiris, resident representative to the Philippines of the IMF, said the agency is holding on to its current GDP growth forecasts for this year and next year until the release of the next World Economic Outlook (WEO) in July.

“We will do an assessment of the outlook and risks for the July WEO release so unlikely to revise anything before that,” Peiris said.

In its latest WEO released in April, the IMF said the country’s GDP would expand 6.8 percent this year and 6.9 percent in 2018. This is well within the targets of 6.5 to 7.5 percent for this year and seven to eight percent for next year set by economic managers.

The Philippine emerged as the fastest growing economy in the region after its GDP expansion accelerated to 6.9 percent last year from 5.9 percent in 2015 as election related spending boosted private consumption.

However, GDP growth eased to 6.4 percent in the first quarter from 6.6 percent in the fourth quarter of 2016 as weak private consumption dragged domestic demand.

IMF deputy director for Asia and the Pacific Department Kenneth Kang said during the Spring Meetings of the IMF and the World Bank in Washington in April the country’s economic growth is expected to remain robust at around seven percent this year and next year led primarily by domestic demand and a recovery in exports.

Kang pointed out investors’ confidence remain strong as shown by the investment grade rating as well as positive and stable outllooks from S&P Global Ratings, Moodys Investor Service and Fitch Ratings.

External shocks arising from the normalization of interest rates in the US and the decision of the United Kingdom to leave the European Union or Brexit, as well as domestic political noise primarily from the all-out illegal drugs campaign of the Duterte administration have led to volatile financial and capital markets.