IMF upgrades growth forecast from 4.8% to 6%

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Category: Top News

Published on Wednesday, 23 January 2013 22:01

Written by Miguel R. Camus / Reporter

The International Monetary Fund (IMF) sees the Philippines growing faster than initially forecast, with sustained economic fundamentals likely helping position the country into a “higher” growth path.  

Visiting IMF officials on Wednesday said the Philippines’s gross domestic product (GDP) could grow by 6 percent this year, compared to its 4.8-percent forecast released in October last year. The IMF sees GDP, which likely grew by 6.5 percent last year, to grow by 5.5 percent in 2014.

“We were surprised by the resilience and strength of domestic demand, and the external sector as well showed strong pockets of growth with BPOs [the business-process outsourcing sector]  in particular doing extremely well,” Rachel Van Elkan, IMF mission chief, said in a  news briefing.

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“We see there have been some improvement in policy frameworks and structural reforms that should make for more continuous, less halting [growth] than in the past. That will also tend to put the Philippines on a somewhat higher trajectory,” she added.

In its statement, the IMF said growth last year was bolstered by accelerating consumption and investment, fueled by money sent home by Filipinos abroad, government spending and record-low interest rates.

“We are expecting that 2013 will look quite similar in terms of the underlying momentum,” Van Elkan said. She noted that the slower growth in 2013 was partly due to a so-called base effect from strong growth last year.

The IMF said risks remain, namely, the fiscal situation in the US and possible “hiccups” from the euro zone. The IMF is also worried about capital inflows and the respective near-term asset-price gains, which it says will make growth “more volatile down the road.”

In its statement, the IMF lauded local monetary authorities and their response to “difficult” global conditions.

“We commend the BSP [Bangko Sentral ng Pilipnas] for utilizing a variety of instruments to help insulate domestic monetary conditions from the abundant liquidity abroad,” IMF said in the statement.

It also noted the passage of the “sin” tax bill and the recent tightening of macroprudential measures and the implementation of the Basel 3 capital requirement next year will help prevent the emergence of financial- sector risk.