IMF keeps Phl growth forecasts

MANILA, Philippines - Philippine growth forecasts were maintained by the International Monetary Fund (IMF) at six percent this year before slightly slowing to 5.5 percent next year.

The projections, however, fall below the Aquino administration’s six to seven-percent target for 2013 and 6.5 to 7.5-percent for 2014. Economic expansion hit an above-goal 6.6 percent last year.

“Robust remittance flows and low interest rates should continue to support private consumption and investment in the Philippines,”  the IMF said in its latest World Economic Outlook for April.

Interest rates could remain low as inflation is projected to be well-managed over the next two years. Rise in consumer prices is seen to hit 3.1 percent and 3.2 percent, well within the central bank’s three to five-percent target range.

A similar picture of “modest” growth and slow inflation is painted in Asia. The region’s gross domestic product (GDP) could grow 5.7 percent and six percent in 2013 and 2014, with inflation settling at 3.9 percent and 4.4 percent, respectively.

Developing and emerging Asia is seen to grow 5.3 percent and 5.7 percent for both years. The ASEAN-5— Indonesia, Malaysia, the Philippines, Thailand and Vietnam— is expected to expand 5.9 percent and 5.5 percent.

For both groups where the Philippines is included, inflation will remain well-managed this year and the next at five percent and 4.5 percent.

“Activity has stabilized in advanced economies and has picked up in emerging market and developing economies, supported by policies and renewed confidence,” the report said.

“Inflation rates also remain generally under control in emerging market and developing economies…,” it added.

The report noted an improving global economy on the back of “improved” developed markets, where efforts to tame budget deficits have slowed growth over the past five years. However, the IMF said recovery “will remain bumpy.”

The global economy is projected to expand 3.3 percent this year, down from the January forecast of 3.5 percent. For 2014, the estimate was kept at four percent.

While policymakers have been successful on hurdling the threat of US “fiscal cliff” last year, new “short-term” and “medium-term” dangers will likely occur such as the bank crisis in Cyprus and “stagnation” in Europe.

High budget deficits in the US and Japan— both embarking on huge bond purchases to boost growth— are also key concerns this year.

“Following a disappointing end to 2012, easier financial conditions, accommodative monetary policies, recovering confidence and special factors will support a re-acceleration of activity, notwithstanding still-tight fiscal policy in the (US) and euro area,” the report said.