Philippine economy picks up speed in second quarter, says IMF

MANILA, Philippines - The International Monetary Fund (IMF) said the Philippine economy likely picked up speed in the second quarter of the year after slowing down in the first quarter on weak global demand and lack of government spending.

IMF resident representative Shanaka Jayanath Peiris said the country’s gross domestic product (GDP) grew slightly faster in the second quarter due to improved spending by the Aquino administration.

“We would expect the economy to have picked up slightly in the second quarter from the first quarter level on improving government spending disbursements and bottoming out of the export decline, although manufacturing activity remained weak and may have dragged down growth,” Peiris said.

The Philippines recorded a 5.2 percent GDP growth in the first quarter of the year from 5.6 percent in the same quarter last year on the back of anemic spending caused by delays in the implementation of much-needed infrastructure projects.

The government is set to announce the country’s GDP growth figure for the second quarter on Thursday.

Last July, the IMF revised downwards the country’s GDP growth forecast to 6.2 percent based on the July World Economic Outlook (WEO) compared to 6.7 percent based on the April WEO as it lowered its global growth forecast amid the slow US economic recovery.

The IMF releases its WEO report during April and in September or October of every year. An updated WEO is also released every January and July of each year.

“The IMF’s GDP forecast for 2015 is 6.2 percent, therefore we expect the economy to gradually pick up through the year from 5.2 percent in the first quarter 2015,” Peiris said.

For the second half, he said the country’s GDP would gain more traction on recovering global demand and higher government expenditures.

“The second half of 2015 is anticipated to be stronger than the first half as global demand recovers and government spending accelerates further,” Peiris said. 

Economic managers see GDP expanding between seven and eight percent this year.

The Philippines missed its GDP growth target of between 6.5 and 7.5 percent as the economy expanded only 6.1 percent last year from 7.2 percent in 2013.

IMF sees the country’s economic expansion picking up to 6.5 percent instead of 6.3 percent next year on the back of higher spending.

 “Growth expected to accelerate further in 2016 to 6.5 as the budget deficit widens to the targeted two percent of GDP and in line with potential growth,” he said.

The IMF slashed its global growth forecast this year to 3.3 percent instead of 3.5 percent. This year’s revised forecast was also lower compared to the 3.4 percent global growth registered last year.

It said the crisis and Greece would have marginal effect on the global economy but was mum on whether the stock market meltdown in China would drag down the global economy. The devaluation of the Chinese yuan also emerged as another factor that could hurt global growth.