The International Monetary Fund (IMF) has reduced its 2019 growth forecast for the Philippines to 6.5 percent due to less rosy global economic prospects coupled with the impact on government spending of the budget delay.
In its April 2019 World Economic Outlook (WEO) report released on Tuesday, the Washington-based IMF cut its growth projection for this year from 6.6 percent previously, even as it projected growth next year to be slightly faster at 6.6 percent.
“The downward revision to the growth forecast for 2019 mainly reflects weaker-than-expected external demand and lower-than-expected public investment partly reflecting the delay in the approval of the 2019 budget,” IMF resident representative in the Philippines Yongzheng Yang said in his response to e-mailed questions late Wednesday.
The growth forecasts for the Philippines in the next two years were nonetheless within the government’s downgraded target ranges of 6-7 percent for 2019 and 6.5-7.5 percent for 2020.
Other multilateral lenders such as the Washington-based World Bank and the Manila-based Asian Development Bank earlier cut their 2019 growth forecasts for the Philippines because of the impasse in Congress on this year’s national budget, the prolonged dry spell due to El Niño, and the slowing global growth.
As for inflation, the IMF expects the rate of increase in prices of basic commodities in the Philippines to fall from the 10-year high of 5.2 percent last year to 3.8 percent this year and 3.3 percent next year, returning within government target.
The current account deficit, meanwhile, was projected by the IMF to narrow from 2.6 percent of gross domestic product in 2018 to 2.2 percent of GDP in 2019 and 1.8 percent in 2020.
The unemployment rate was seen more or less steady, although the forecasts for this year of 5.5 percent and 5.4 percent next year were slightly higher than the 5.3-percent jobless rate posted last year. —BEN O. DE VERA