IMF to raise ’16 GDP forecast for PH; notes uncertainty in ’17

Multilateral lender International Monetary Fund (IMF) expects the Philippines’ full-year economic growth to exceed its previous forecast of 6.4 percent following the better-than-expected expansion during the first three months of the Duterte administration.

“The third-quarter GDP (gross domestic product) outturn in the Philippines, led by a recovery in agriculture and continued strength of private consumption and gross investment, was faster than anticipated than in our 6.4-percent growth forecast for 2016. Therefore, we will mostly likely be revising up our growth forecast for 2016 in the next round of World Economic Outlook [report] revisions, while the adjustments for 2017 and medium term will also depend on global developments and financial conditions that have become more uncertain lately,” IMF resident representative Shanaka Jayanath Peiris said.

GDP grew 7.1 percent in the third quarter—the fastest among emerging Asian economies, bringing the nine-month average to 7 percent. The government targets a “conservative” GDP growth of 6-7 percent this year.

Last month, the Department of Finance quoted a recent IMF report as saying that “the outlook for the Philippine economy remains favorable despite external headwinds” as “Philippine authorities are well-equipped to respond as needed with suitable policies should any risks materialize, particularly given the strong fundamentals and ample policy space.”

According to the DOF, the report also noted that the Philippines remained committed to continue implementing sound macroeconomic policies and wide-ranging structural reforms to support the strong and sustained growth of the economy and enable a durable reduction in unemployment and poverty.

As such, the DOF said the IMF supported the government’s objective to accelerate poverty reduction while also welcoming the 10-point socioeconomic agenda aimed at raising social spending as well as promoting agriculture and rural development.

The Duterte administration’s socioeconomic agenda ultimately targets to slash poverty incidence to about 14 percent by 2022 from 21.6 percent last year.

“[The IMF] supports the government’s plans to improve human capital and social services for the poor. It also supports the efforts to promote development in a more geographically balanced manner. In this respect, staff welcomes the plans to improve the conditional cash transfer program, raise investment in education and health, promote rural and value chain development and ensure land tenure in agriculture,” the DOF quoted the Washington-based lender as saying.