IMF raises RP growth forecast to 6%

MANILA, Philippines – The International Monetary Fund (IMF) upgraded anew yesterday the Philippines’ economic outlook for this year after the stronger-than-expected gross domestic product (GDP) growth in the first quarter of the year.

The IMF projected the Philippines will grow by six percent this year, up from the revised forecast of 3.6 percent last April.

The multinational lender originally expected the country’s GDP to expand by 3.2 percent this year.

The new GDP forecast is the higher end of the revised GDP growth target of five percent to six percent recently adopted by the Cabinet-level Development Budget Coordination Committee (DBCC).

Economic managers through the DBCC was forced to revise the government’s original GDP growth target of 2.6 percent to 3.6 percent this year after the GDP growth zoomed to its fastest level in almost two years at 7.3 percent in the first quarter from 0.5 percent in the same quarter last year.

Despite the upgrade, the Philippines is still expected to be the laggard in terms of growth among Southeast Asian countries this year. The Association of Southeast Asian Nations or ASEAN-5 is now expected to grow by 6.4 percent instead of 5.5 percent this year.

The IMF’s revised GDP growth forecast for the Philippines is slower than Thailand’s seven percent that was revised upwards from 5.5 percent, Malaysia’s 6.7 percent that was revised upwards from 4.7 percent, Vietnam’s 6.5 percent from six percent, and Indonesia’s six percent.

In all, IMF expects countries in the Asia Pacific Region including China, Japan, India, Australia, and New Zealand to grow by 7.5 percent instead of seven percent this year on the back of buoyant exports and strong private domestic demand.

“Asia’s strong recovery from the global financial crisis continued in the first half of 2010, despite renewed tension in global financial markets. First-quarter GDP outturns were generally stronger than anticipated at the time of the April 2010 World Economic Outlook, and high-frequency indicators suggest that economic activity remained brisk during the second quarter,” the IMF said.

On the other hand, newly industrialized Asian economies (NIEs) including Hong Kong, Singapore, Korea, and Taiwan are expected to post a GDP growth of 6.7 percent this year.

“Both NIEs and ASEAN economies are expected to grow by about 6.5 percent in 2010, as a result of surging exports and private domestic demand, before moderating to 4.75 percent and 5.5 percent, respectively, in 2011,” IMF stated.

The multinational lender, however, believes that growth would slowdown next year due to the impact of the debt crisis in Europe.

For 2011, the IMF said the GDP of the Philippines would grow by four percent but would still be slower compared to Vietnam’s 6.8 percent, Indonesia’s 6.2 percent, Malaysia’s 5.3 percent, and Thailand’s 4.5 percent. The growth of the ASEAN-5 would ease to 5.5 percent next year. –Lawrence Agcaoili (The Philippine Star)