PHL to continue as best performing economy in Southeast Asia–IMF

The International Monetary Fund (IMF) sees a below-target growth for the Philippines next year, but raised its expectations for 2015.

In its recently published World Economic Outlook (WEO) for April, the IMF said its 2016 growth projection for the Philippines is at 6.3 percent.

This is lower than its earlier forecast of 6.4 percent, as announced in January this year. It is also below the government’s growth target, at 7 percent to 8 percent.

The IMF announced earlier this month that it has raised its growth outlook for the Philippines for this year from 6.6 percent to 6.7 percent, on the assumption of increased government spending for 2015.

Amid the downgrade of growth forecast, the IMF said the Philippines is still set to become the fastest-growing economy in Asean this year and in 2016, followed by Vietnam and Indonesia.

For the so-called Asean-5, growth is seen to generally pick up to 5.2 percent, from the 4.6-percent actual growth in 2014. This pace of growth is seen to be sustained up to 2016 at 5.3 percent, as projected by the IMF.

The world’s economic outlook, meanwhile, is also seen to slightly pick up to 3.5 percent from the 3.4-percent actual growth seen in 2014. In 2016 the IMF sees world output to hit 3.8 percent.

Inflation for the country, meanwhile, is seen to hit 2.1 percent—or at the bottom end of the Bangko Sentral ng Pilipinas’s (BSP) target for the year at 2 percent to 4 percent. IMF Resident Representative Shanaka Jayanath Peiris said is due to the lower commodity prices during the period.

For next year, the country’s inflation rate is seen to pick up at 2.8 percent—still within the government’s target.

Among the downside risks to growth going forward in the region, as discussed by the IMF in its WEO report, is the slower economic expansion in China and Japan, the persistent US dollar strength against the euro and yen, and the movements in global financial conditions that may affect the region’s and individual country’s markets.

The IMF is set to visit the Philippines in May for its Article IV consultation. “The agenda for the next article is an ongoing discussion by usually covers the economic outlook, risks and policies the sustain growth over the medium,” Peiris said in an e-mailed response to the BusinessMirror. –Businessmirror