MANILA, Philippines - The International Monetary Fund raised its 2017 growth forecast for the Philippines on the back of strong macroeconomic fundamentals and expectations of a rebound in export earnings.
IMF resident representative Shanaka Jayanath Peiris said the multilateral lender has upgraded its gross domestic product growth assumption for the Philippines to 6.8 percent from 6.7 percent.
“The Philippines is expected to maintain its strong GDP growth momentum registered in 2016 into 2017 at a pace of about 6.8 percent, supported by a fiscal stimulus as the budget deficit widens towards the three percent of GDP target,” Peiris said.
The IMF fully supports the government’s plan to widen the budget deficit target to three percent of GDP in the medium-term to boost infrastructure development.
The Philippines emerged as the fastest growing economy in the region after it recorded a 7.1-percent expansion in the third quarter of 2016, outpacing China’s 6.7 percent, Vietnam’s 6.4 percent, Indonesia’s five percent, and Malaysia’s 4.3 percent.
The growth forecast upgrade was also due to a modest recovery in exports. “Exports are also anticipated to recover reflecting the pick-up in global growth and commodity prices,” Peiris said.
Peiris highlighted the need for additional revenue to finance further infrastructure and social spending.
“The medium term growth outlook would depend on the more uncertain global economic outlook and the passage of the administration’s tax reform proposals that would be important to continue to raise public infrastructure investment and social spending to benefit from the demographic dividend,” he said. Zinnia dela Peña