The International Monetary Fund (IMF) has slashed its growth projections for the Philippine economy this year amid weak state spending, which stunted the country’s performance in the first quarter.
Shanaka Jayaneth Peiris, IMF’s resident representative in Manila, said weak global demand for exports from countries like the Philippines, as well as the effects of dry weather on the agricultural sector would drag on the economy’s prospects.
For 2015, the IMF said it sees Philippine gross domestic product (GDP) rising by 6.2 percent, before accelerating to 6.5 percent in 2016. The expected acceleration in 2016 is contingent on the government’s ability to hike spending, particularly in key areas such as infrastructure, healthcare, and education.
READ: IMF growth forecast for PH now out of reach
Released Thursday evening, the new numbers compare with projections made in April that said growth would hit 6.7 percent this year and 6.3 percent next year.
The government is targeting GDP growth of at least 7 percent in 2015 and 7.5 percent in 2016. Last year, growth stood at 6.1 percent, falling short of the targeted 6.5 percent.
READ: PH growth slows to 5.2%
“The first quarter 2015 slowdown was due mainly to temporary factors, including the effects of dry weather on agricultural production, weak global demand, and slow budget execution,” Peiris said in an email to the Inquirer.
In the first quarter of 2015, the economy grew by 5.2 percent, a three-year low.