The International Monetary Fund on Tuesday retained its 2017 growth forecast for the Philippines at 6.6 percent amid better prospects for the global economy that is expected to benefit the growth trajectories of most countries.
Yang Yongzheng, IMF resident representative to the Philippines who replaced Shanaka Jayanath Peiris, said in an email to reporters the 6.6-percent growth forecast for 2017 was similar to what it released during the Article IV consultation held in the middle of this year.
“We have retained the forecast as we see continued robust domestic demand driven by investment and consumption, and fiscal policy is supportive of growth,” Yang said.
The IMF said in its World Economic Outlook for October 2017 the Philippines would continue to outperform other large economies in the Asean region.
“In the Asean-5 economies [Indonesia, Malaysia, Philippines, Thailand, Vietnam], growth is expected to strengthen in 2017 to 5.2 percent (from 5 percent in April), partly because of stronger-than-expected external demand from China and Europe,” the IMF said.
“Specifically, economic activity in 2017 is projected to expand by 5.2 percent in Indonesia, 5.4 percent in Malaysia, 6.6 percent in the Philippines, 3.7 percent in Thailand and 6.3 percent in Vietnam,” it said.
The IMF in July cut its growth forecast for the Philippines to 6.6 percent from the earlier estimate of 6.8 percent because of the lower-than-expected expansion of 6.4 percent in the first quarter and sluggish government spending during the period.
Data, however, showed that economic growth picked up in the second quarter to 6.5 percent, bringing the first half average to 6.5 percent, representing the lower line of the Duterte administration’s target range of 6.5 percent to 7.5 percent.
The IMF also slightly cut its 2018 growth forecast for the Philippines to 6.7 percent from 6.8 percent, but this would still make it the fastest expansion among Asean-5 countries.
Indonesia is expected to grow by 5.3 percent next year, Thailand by 3.5 percent, Malaysia by 4.8 percent and Vietnam by 6.3 percent.
China and India are expected to grow 6.8 percent and 6.7 percent, respectively this year. Next year, the two giant economies are projected to expand 6.5 percent and 7.4 percent, respectively.
IMF mission chief Luis Breuer said earlier that Philippine economic growth was seen “to remain close to potential at 6.6 percent in 2017”, supported by robust domestic demand and recovery in exports.
Economists predicted that growth would be more robust in the second half of 2017 as the Duterte administration ramped up fiscal spending particularly on big-ticket infrastructure projects under the ambitious P8-trillion “Build, Build, Build” program.
Under the program, the government aims to build more airports, seaports, highways, bridges, railways and water and irrigation projects across the country. A subway is also planned to be constructed in Metro Manila.
The Philippine economy grew 6.9 percent in 2016.