IMF to raise Philippine growth forecast

MANILA, Philippines – The International Monetary Fund (IMF) is set to upgrade anew the economic growth projection for the country after a stronger-than-expected expansion in the third quarter.

Shanaka Jayanath Peiris, IMF resident representative, said the 7.1 percent gross domestic product (GDP) growth recorded in the third quarter was faster than the lender’s full-year growth forecast of 6.4 percent. 

“Therefore, we will mostly likely be revising up our growth forecast for 2016 in the next round of world economic outlook revisions, while the adjustments for 2017 and medium term will also depend on global developments and financial conditions that have become more uncertain lately,” Peiris said. 

The Philippines emerged as the fastest growing economy in the region after it recorded a 7.1-percent expansion in the third quarter. 

The country’s growth was faster than China’s 6.7 percent, Vietnam’s 6.4 percent, Indonesia’s five percent and Malaysia’s 4.3 percent.

This brought the GDP expansion in the first nine months to seven percent, the higher end of the six to seven percent target penned by economic managers.

Peiris said the GDP outturn in the third quarter was led by a recovery in agriculture and continued strength of private consumption and gross investment. 

Just last September, the IMF raised the country’s 2016 growth forecast to 6.4 percent from the original target of six percent. 

“The outlook for the Philippine economy remains favorable despite external headwinds,” IMF reported after the completion of the 2016 Article IV Consultation. 

IMF sees inflation averaging two percent this year and 3.4 percent next year, well within the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP) between 2016 and 2018. 

“The Philippine economy has performed well in recent years with rising potential growth and strong macro fundamentals. Economic growth is supported by robust domestic demand and is broadly in line with potential while the outlook for inflation is well within the target band,” IMF said. 

Inflation averaged 1.6 percent in the first 10 months after remaining steady at 2.3 percent last October. 

Earlier, the Asian Development Bank (ADB) upgraded the country’s 2016 GDP growth forecast to 6.8 percent from of 6.4 percent. 

ADB country economist Aekapol Chongvilaivan said the upgrade was due to the strong 7.1 percent GDP growth in the third quarter. 

“The higher forecast is due to the third quarter, when growth was much higher than expectation. It is partly because export performance is actually better than expected, and this is supported by a weakening peso during the third quarter,” Chongvilaivan said.