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IMF, World Bank officials laud Philippine resiliency to external shocks

Carlo S. Lorenciana (The Freeman) - September 13, 2015 - 10:00am

CEBU, Philippines – Officials from the International Monetary Fund and World Bank affirmed their confidence on the Philippine economy, saying it has well managed external shocks amid financial market volatilities and the global economic slowdown.

IMF Deputy Managing Director Mitsuhiro Furusawa said that compared with its other neighboring countries, the Philippines will relatively be less affected by economic woes in China, the world's second-largest economy.

The Philippines' good handling of external shocks compared with other economies is due to its prudent macroeconomic policies, Furusawa told a press briefing during the recently concluded Finance Ministers' Meeting of the Asia-Pacific Economic Cooperation group last Friday in Mactan, Cebu.

For World Bank Vice President for East Asia and the Pacific Axel van Trotsenburg, the country's economic management has been done relatively well due to good macroeconomic policies.

These, in turn, have resulted to decreasing inflation, reducing debt levels and increasing international reserves, he said in a separate briefing.

Odd Per Brekk, IMF's director for Asia and the Pacific, noted he does not see the Philippine economy overheating soon as growth remains robust. Overheating in economy pertains to productive capacity unable to keep pace with growing total demand.

One factor that is helping and benefiting the country, he said, is the current cheap oil.

Furusawa also said he does not expect a rapid increase in oil prices in the short-term considering the prospects for global oil demand.

"Lower oil prices is good since it [Philippines] is an oil importing country," Brekk said, adding that low inflation is also supporting growth in the country.

"Inflation has been at the lower end of the central bank's range. We think the monetary stance at this point is appropriate," the IMF official said.

The Bangko Sentral ng Pilipinas has forecast inflation to range between 2% to 4% this year. Last month Philippine inflation eased to 0.6%, amid declining food prices as well as cheaper power rates and lower transport costs, from 0.8% in July and 4.9% recorded in August 2014.

In terms of financial situation, Brekk said the Philippines is quite robust, with its fiscal and monetary policies helping respond to spillovers from volatilities in global financial markets.

IMF officials also said they are releasing IMF's World Economic Outlook update next month, which will reveal the revisions of its growth forecast for the global economy particularly the Asia-Pacific region slowdown in global economic activity.

It can be remembered the IMF revised downward its growth forecast for the Philippines to 6.2% compared to 6.7% it set in April as it also lowered down its global growth forecast amid the slow US economic recovery.

IMF sees the nation's economic expansion to pick up to 6.5% next year on the back of expected higher public spending.

ASIA AND THE PACIFIC BANGKO SENTRAL BREKK DEPUTY MANAGING DIRECTOR MITSUHIRO FURUSAWA EAST ASIA AND THE PACIFIC AXEL ECONOMIC FINANCE MINISTERS FOR WORLD BANK VICE PRESIDENT FURUSAWA IMF INTERNATIONAL MONETARY FUND AND WORLD BANK
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