IMF also slashes growth forecast for RP to 4.7%

The International Monetary Fund had joined other multinational lenders in slashing its forecast on economic growth in the Philippines this year to 4.7 percent from an original five percent, while next year’s growth is expected at only 4.9 percent as the IMF expects the global economy slowdown to persist.

The downgrade came in the wake of a similar forecast output reduction by the World Bank and the Asian Developmen Bank (ADB) earlier in which local output this year was also seen averaging no more than 4.7 percent.

In the World Bank report, local output next year was seen averaging five percent.

In IMF’s World Economic Outlook report, the country’s growth prospects this year and next were lower than Vietnam’s but higher than Thailand’s.

Vietnam’s gross domestic product was seen accelerating by 5.8 percent this year to 6.3 percent next year while Thailand should grow at a slower pace averaging only 3.5 percent this year and only 4.8 percent next year.

Domestic inflation, which already averaged 4.3 percent as of end-August, was seen averaging higher this year to 4.5 percent but should decelerate to around 4.1 percent by next year.

The Bangko Sentral ng Pilipinas (BSP), using latest price simulations, recently scaled back the year’s forecast inflation from an average of 4.7 percent to only 4.46 percent or slightly more moderate than the IMF’s latest forecast.

The country’s current account was seen to end this year in a state of surplus equal to at least 1.7 percent of GDP and at least 1.3 percent of GDP next year, indicating a country that has more foreign funds entering than leaving the economy and therefore a net creditor to the rest of the world.

IMF data show the Philippines having posted a current account surplus last year averaging 4.2 percent of GDP.

While the IMF has painted more moderate growth prospects for the Philippines this year and next, this comes at a time when most countries in Europe and the United States are hobbled by fiscal and monetary issues that has both weakened their growth prospects and undermined the confidence of investors and consumers alike.

“The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing. Against a backdrop of unresolved structural fragilities, a barrage of shocks hit the international economy this year,” the IMF said.

It anticipated that global growth will moderate to about four percent through 2012, from over five percent in 2010.

Real GDP in the advanced economies was projected to expand at an anemic pace of about 1.5 percent in 2011 and two percent in 2012, helped by a gradual unwinding of the temporary forces that have held back activity during much of the second quarter of 2011, the IMF said. CL