IMF, seeing no more budget delay, raises PH growth forecast to 6.3 percent

With no more budget delay in sight, the International Monetary Fund (IMF) has slightly upgraded its 2020 growth forecast for the Philippines to 6.3 percent.

IMF resident representative in the Philippines Yongzheng Yang told reporters on Monday, Nov. 18, that the Washington-based multilateral lender took into account the “strong” 6.2-percent gross domestic product (GDP) growth in the third quarter of 2019 in raising projected growth from 6.2 percent in an October report to 6.3 percent.

Also, Yang said the high likelihood that the P4.1-trillion 2020 national budget will be passed on time would speed up growth next year.

The IMF’s higher updated 2020 projection nonetheless remained below the government’s 6.5-7.5 percent target.

The IMF had downgraded its 2019 GDP growth forecast for the Philippines to 5.7 percent—below the government goal of 6-7 percent—due to the dismal 5.5-percent economic expansion posted in the first half of 2019 as a result of delayed approval of the P3.7-trillion budget by a Congress fighting over funds that legislators can pocket through pork, or pet projects.

The delay forced the government to underspend as it relied on a reenacted 2018 budget.

“The Philippines remains one of the best-performing economies in the region,” said IMF mission chief Tomas Helbling at a press conference after an IMF delegation completed a visit to the Philippines this year.

Helbling said the faster growth expected in 2020 was “underpinned by an increase in government spending and the recent monetary policy easing.”

The Bangko Sentral ng Pilipinas (BSP) so far this year cut the policy rate by a cumulative 75 basis points to 4 percent amid easing inflation.

The IMF projected inflation at 3 percent by end-2020.

“The medium-term economic outlook remains favorable, especially if the strong structural reform momentum continues,” Helbling said.

However, Helbling said “the near-term rebound in GDP growth could be weaker than expected because of global trade tensions and related policy uncertainty, a change in global financial conditions, and natural disasters.”/Edited by TSB