IMF confirms RP’s growth projections

The International Monetary Fund (IMF) said yesterday the country’s economy will continue to grow this year, validating the government’s projection of a four percent growth in gross domestic product (GDP) for this year.

Following the release of the third quarter growth figures which showed a 4.8 percent expansion in GDP and a 5.7 percent increase in gross national product (GNP), IMF resident representative Sean Nolan expressed the view that "there is absolutely no reason to question the numbers."

Many economists had feared that growth would slow in the third quarter due to negative political and economic factors.

The IMF is expecting the economy to grow by 3.8 percent this year which is close to the government’s projection of a four percent expansion in GDP.

Economic Planning Secretary Felipe Medalla earlier said the government is expecting growth in the fourth quarter to hover at around 3.4 percent, which would put the government’s target of at least four percent economic expansion this year within reach.

For next year, the IMF is expecting the economy to grow by a slower three percent due in part to the expected slowdown in the US economy.

"The projected GDP growth for the Philippines next year will only be around three percent due to the expected slowdown in the US economy," visiting IMF deputy director for economic research David Robinson said.

Robinson, however, said the US economy’s slowdown is expected to be more of a "soft landing" rather than a "hard landing." A hard landing, Robinson said, would have a more adverse impact on the Philippines and Asia as a whole.

Based on the IMF’s projection, a hard landing for the US economy could result in a half a percent to one percent slowdown in Asian economies.

Robinson said one of the contributing factors to a country’s economic performance is its ability to control its fiscal sector.

He added that maintaining a monetary policy that keeps inflation in check is also crucial in promoting economic growth.

"Fiscal and monetary policies should always try to work together," Robinson explained.

For his part, Nolan said the fiscal challenge facing the Philippines remains to be its ability to raise revenues.

Nolan was surprised by the government’s plan to borrow P20 billion next year to finance its pump-priming activity.

Although Nolan preferred to verify such plan first, some economists earlier stressed the need for the government to concentrate more on fiscal consolidation next year before embarking on another pump-priming spree.