MANILA: Citing the country’s improved fundamentals and resiliency to external headwinds, international Monetary Fund (IMF) and Asian Development Bank (ADB) have raised their economic growth forecasts for the Philippines this year and the next.
The IMF, in a report quoted by Philippine Star, raised the gross domestic product (GDP) outlook for the Philippines to 6.4 percent instead of six percent this year and to 6.7 percent instead of 6.2 percent next year.
Meanwhile, in an update to its Asian Development Outlook 2016, Manila-based ADB similarly raised its GDP forecast for the Philippines to 6.4 percent this year from an earlier six percent. It also raised the 2017 growth projection to 6.1 percent from 6.2 percent, the report said.
The country’s economic managers reportedly expect GDP to expand between six to seven percent this year and 6.5 to 7.5 percent in 2017.
“The outlook for the Philippine economy remains favorable despite external headwinds,” IMF was quoted as saying.
IMF reportedly said the Philippine economy continued to perform strongly as GDP growth accelerated to seven percent in the second quarter from 6.8 percent in the first quarter, boosted mainly by election-related spending.
This brought the GDP expansion to a three-year high 6.9 percent in the first half of the year from 5.5 percent in the same period last year and closer to the higher end of the six to seven percent target set by economic managers, said the news portal.
“The Philippine economy has performed well in recent years with rising potential growth and strong macro fundamentals. Economic growth is supported by robust domestic demand and is broadly in line with potential while the outlook for inflation is well within the target band,” IMF reportedly said.
However, the Washington-based multilateral lender noted underemployment and poverty rates have remained stubbornly high despite the sustained economic expansion.
“The strong economic performance, however, has not yet fully benefited a wide range of the population. Poverty and inequality remain high. Poor infrastructure has constrained private investment and job creation. Public investment has risen but continues to be low due to weak implementation capacity, while progress has been made on fiscal transparency,” it was quoted as saying by Philippine Star.
Upside risks to growth include stronger domestic demand spurred by low commodity prices and further improvements in budget execution, the IMF reportedly said.
On the other hand, it pointed out downside risks include the lower growth in China, tighter global financial conditions, and a surge in global financial volatility that could lead to capital outflows.
President Duterte has an opportunity to put the economy on a higher and more equitable growth path under its 10-point socioeconomic agenda, IMF was quoted as saying by Philippine Star.
