IMF says brisk Philippines economic growth to continue

MANILA, Philippines – Robust economic growth in the Philippines should continue this year and next despite the anticipated unwinding of the massive US stimulus program, the International Monetary Fund said Tuesday.

“In 2013, growth is expected to remain strong at 6 3/4 percent, easing to about 6.0 percent in 2014, which is still somewhat faster than potential output,” IMF official Rachel van Elkan said in a statement.

Both figures would be below the 6.8 percent gross domestic product (GDP) expansion in 2012, and the 7.6 percent advance in the first half of 2013, the latter underpinned by robust consumption and investment amid subdued export markets.

With the healthy first-half data, the government now expects full-year growth to exceed its 6-7 percent target.

Van Elkan, who led an IMF mission that visited Manila last week, said the Philippines like other emerging markets saw its currency weaken after an announcement in late May of the prospective tapering of asset purchases by the US Federal Reserve.

“Nonetheless, when tapering does eventually begin, the Philippines’ strong fundamentals… position the economy to adjust smoothly to the accompanying capital flow reversal and slowdown in regional growth.”

Van Elkan said the recent fall in the peso would “raise inflation gradually” but the overall balance of payments should remain in small surplus, backed by overseas worker remittances and business process outsourcing receipts.

The fiscal deficit should come in within the 2.0 percent of GDP budget target this year as higher spending is offset by an increase in revenues, she added.