The International Monetary Fund in its World Economic Outlook for April kept its growth forecast on the Philippines at 6 percent in 2016 and 6.2 percent in 2017 mainly on robust domestic demand.
“Real GDP growth is projected at 6.0 percent in 2016 and 6.2 in 2017, unchanged from the February 2016 IMF mission statement, driven by continued strong domestic demand and a modest fiscal stimulus in 2016,” IMF resident representative to the Philippines Shanaka Jayanath Peiris said in an e-mailed statement Tuesday.
“Monetary conditions also remain supportive of growth,” Peiris said.
He said the economic outlook was one of the strongest in the region but subject to increased downside risks, including lower growth in China and the region, higher global financial volatility and capital outflows, and weather related disruptions.
“However, the Philippines’ capacity to respond if these risks materialize is substantial given its ample reserves and policy space, both monetary and fiscal,” Peiris said.
He said a continuation of prudent macroeconomic policies and good governance over the medium term period would be critical to sustain investor confidence and the growth momentum.
Peiris said structural reforms would also be needed to raise the low rate of government revenue and infrastructure investment, opening up the economy to greater competition and foreign investment, and benefiting from the demographic dividend by addressing skill mismatches and inequality of opportunity.
The multilateral lender during the IMF mission to the Philippines led by Chikahisa Sumi from Feb. 11 to 17 lowered its growth forecast for the Philippines this year to 6 percent from the previous estimate of 6.2 percent made in January, on account mainly on slower global growth, financial market volatility and capital reversals.
The forecast in 2017 was also reduced to 6.2 percent from 6.5 percent.
Sumi earlier said the Philippine economy performed remarkably well in 2015 despite a weaker external environment and global financial turbulence in 2015. He said despite a large drag from net exports, real GDP remained robust at 5.8 percent, reflecting a strong pickup in private investment and public construction through the year.
The 5.8-percent GDP growth last year was below the 6.1-percent expansion a year ago but remained one of the fastest in the Asia. It was also significantly below the government’s official forecast of between 7 percent and 8 percent last year.
The government expects the economy to expand between 6.8 percent and 7.8 percent on robust domestic demand.
Sumi noted the decline in unemployment rate to a decade’s low of 5.3 percent, although significant underemployment remained. Inflation, meanwhile, fell to 1.4 percent in 2015, below the target range of 2 percent to 4 percent, due to lower food and fuel prices.