The International Monetary Fund (IMF) expects the Philippines to withstand risks to economic expansion and outpace neighboring countries’ growth this year.
In its April 2016 World Economic Outlook (WEO) report released last night in Manila, the IMF kept its growth forecasts for the Philippines of 6 percent for 2016 and 6.2 percent for 2017, the same figures it released after a mission visited the country last February.
The IMF’s projection for this year was below the government’s 6.8-7.8 percent target, but nonetheless faster than last year’s 5.8-percent expansion, which was the slowest annual growth rate in four years.
In the January 2016 WEO, the multilateral lender slightly downgraded to 6.2 percent from 6.3 percent last October its forecast for the country “to reflect the more challenging external environment.”
In an e-mail to reporters on Tuesday, IMF resident representative Shanaka Jayanath Peiris said the Philippine economy this year would be driven by “continued strong domestic demand and a modest fiscal stimulus,” adding that prevailing monetary conditions supported further economic expansion.
According to Peiris, the outlook for the Philippines was “one of the strongest in the region,” although it remained “subject to increased downside risks, including lower growth in China and the region, higher global financial volatility and capital outflows and weather-related disruptions.”
“However, the Philippines’ capacity to respond if these risks materialize is substantial given its ample reserves and policy space, both monetary and fiscal,” Peiris said.
In light of a change in administration by midyear, Peiris said a continuation of prudent macroeconomic policies and good governance would be critical to sustain investor confidence and the growth momentum.
“To support growth, structural reforms will also be needed to raise the low rate of government revenue and infrastructure investment, opening up the economy to greater competition and foreign investment and benefiting from the demographic dividend by addressing skill mismatches and inequality of opportunity,” Peiris added.
In 2016, the IMF said it expected inflation to settle at 2 percent before jumping to 3.4 percent next year, both rates within the government’s 2-4 percent target range. The unemployment rate, meanwhile, is seen sliding to 6 percent this year and 5.9 percent in 2017 from 6.3 percent last year.