IMF growth forecast for PH now out of reach

THE INTERNATIONAL Monetary Fund’s (IMF) projection for Philippine economic growth this year may now be out of reach following the country’s dismal first-quarter performance.

Shank Jayaneth Peiris, the IMF’s resident representative for the Philippines, said a review of forecasts for the country might be slated for later this year. Last month, the IMF said it saw the Philippine economy growing by 6.7 percent in 2015, accelerating from 2014’s 6.1 percent.

“The significant negative surprise in the first quarter and base effects going forward mean that our forecast for 2015 will be reviewed,” Peiris said in an e-mail to the Inquirer.

New projections for 2015 and 2016 will be released once the IMF completes its updated World Economic Outlook (WEO) in October.

In the first quarter of the year, the Philippine economy grew by 5.2 percent, the slowest since 2012. Weak public spending and lackluster exports growth were tagged as the main culprits for the weak performance.

Weak first-quarter growth puts at risk the government’s target of 7 to 8 percent for this year. Peiris said he was still hopeful that the economy would recover in the succeeding quarters.

The economy must grow by 7.5 percent during each of the three remaining quarters of the year for the government to hit the lower end of its 7-8 percent growth target for 2015—something that was “not impossible,” according to Economic Planning Secretary Arsenio Balisacan.

“We still expect growth to pick up through the year as exports recover with the global economy and public spending accelerates with the measures that are being put in place by Department of Budget and Management,” IMF’s Peiris said.

In a separate note to clients, American bank JP Morgan was also hopeful of Philippine prospects, noting that business sentiment remained broadly positive.

Historically low domestic interest rates and accommodative credit conditions would also help drive demand from both the public and private sectors, JP Morgan said.