The International Monetary Fund has maintained its growth projection for the Philippines for this year and next, citing the favorable impact on the economy of the cheap cost of credit and a sustained rise in remittances.
In its latest World Economic Outlook (WEO) report released Tuesday, the IMF said it still expected the Philippines to grow by 6 percent this year and 5.5 percent in 2014 on the back of strong domestic demand.
It said domestic demand was likely to be fueled by the low interest-rate environment that could encourage households and enterprises to borrow to finance consumption and investment activities.
“Robust remittance flows and low interest rates should continue to support private consumption and investments in the Philippines,” the IMF said in the report.
The IMF’s statement is consistent with the projections of the Bangko Sentral ng Pilipinas, which earlier said remittances to the country were expected to grow at least 6 percent this year and that interest rates were expected to remain generally low.
The IMF’s growth projections for the Philippines were similar to its outlook for Asia as a whole. The IMF said the region’s growth would largely be supported by consumption and investment activities within the domestic markets and partly by slight improvement in global demand.
“For Asia as a whole, growth will pick up modestly largely as a result of recovering external demand and continued solid domestic demand,” the IMF said.
It projected Asia to grow an average 5.7 and 6 percent this year and in 2014. This meant Asia was still seen to continue driving growth of the world economy as advanced economies in the West were likely to post subdued growth rates.