IMF may downgrade PHL growth forecast

By Bianca Cuaresma & Genivi Factao

The International Monetary Fund (IMF) looks to recast the country’s forecast growth path after subpar gross domestic product (GDP) results in the first and second quarters of the year.

IMF Resident Representative to the Philippines Shanaka Jayanath Peiris said local output growth could prove lower than the government forecast for this year and the next.

“The downward revision to the first-quarter GDP and somewhat weaker global environment may result in a slightly lower forecast than our original 6.2 percent and 6.5 percent for 2015 and 2016,” Peiris told reporters on Wednesday.

At present, the official stance of the Development Budget Coordination Committee (DBCC) projects growth this year averaging 7 percent to 8 percent. However, Economic Planning Secretary Arsenio M. Balisacan more recently told reporters that the “realistic scenario” was for the country to grow at 6 percent to 6.5 percent this year instead.

“Philippine fundamental is strong. It has a [current account] surplus, high [foreign currency] reserves, low debt. We feel the Philippines is one of the most resilient economies in the region. The Philippines do better than the rest” in Asia, Peiris said in another interview at the sidelines of the Asean Venture Capital Journal Private Equity and Venture forum.

Depending on the magnitude of the IMF local output growth revision, continued economic expansion was seen at the low end of the multilateral lender’s 6.2-percent target.

Peiris said the revised forecast will be announced in October, as part of the IMF’s World Economic Outlook report.

Just last week the Philippine Statistics Authority (PSA) revised the first-quarter GDP report to only 5 percent from 5.2 percent originally. They also announced second-quarter GDP averaging 5.6 percent.

The IMF resident representative also said they “still expect” growth to gradually pick up in the second half until 2016, supported by an acceleration in public spending, a recovery in exports and continued accommodative monetary condition.

“Improving infrastructures requires a public investment push supported by higher revenues and public-private partnership. We see fiscal stimulus will come in and spending will increase throughout the year,” Peiris also said.

On the recent financial market turmoil, Peiris expressed confidence on the country’s strong macroeconomic fundamentals, saying this will “help cushion the economy from global financial market volatility with exchange-rate flexibility serving as a shock absorber and supporting growth.”

Immediately after the PSA announced the country’s second-quarter performance, several private economists promptly scaled back their growth projections.

These include, but are not limited to, Metrobank research, now down to 6 percent; Barclays Capital, from 6.5 percent to 5.5 percent; Capital Economics, from 6 percent to 5.7 percent; and Bank of the Philippine Islands, from 6 to 6.2 percent.

 

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