IMF: Philippines may grow at faster clip despite problems

Although rising global oil prices and weak demand from advanced economies may pull down growth prospects of most other emerging markets, the Philippines is still expected to grow by a faster clip in 2013, the International Monetary Fund reported.

In its latest World Economic Outlook report, the IMF estimated that the Philippines could grow by 4.7 percent next year—faster than the 2012 projection of 4.2 percent announced earlier.

The IMF’s growth forecasts for this year and the next are below the government’s own targets—the government wants the economy to grow by 5 to 6 percent this year and even faster in the years ahead.

But the multilateral institution’s forecasts are considered to be decent given the much weaker projections for advanced economies.

Other countries in Southeast Asia are likewise expected to post faster growth rates next year, IMF said.

However, the institution pointed out that policymakers from emerging markets should be on their guard for potential spikes in inflation, brought on by increases in world oil prices and the continuing weakness of advanced economies.

The eurozone, a key export market for emerging economies like the Philippines, is likely to contract by 0.3 percent this year and post a nearly flat growth of 0.9 percent in 2013, the IMF said.

To address these challenges, IMF said, policymakers from emerging markets must implement measures that will help spur domestic demand.

“The key near-term challenge for emerging and developing economies is how to appropriately calibrate macroeconomic policies to address the significant downside risks from advanced economies while keeping in check overheating pressures from strong activity, high credit growth, volatile capital flows, still elevated commodity prices, and renewed risks to inflation from energy prices,” the IMF said in the report.

In the Philippines, inflation has remained manageable, the Bangko Sentral ng Pilipinas said, although it acknowledged the need to closely monitor the impact of global oil prices on domestic inflation.

In the first quarter, inflation in the Philippines averaged 3.1 percent. The government has set its 2012 inflation target at a range of 3 to 5 percent.