IMF cuts PH growth forecast to 6.5% for 2019

MANILA, Philippines — The International Monetary Fund (IMF) has reduced its 2019 growth forecast for the Philippines to 6.5 percent in line with less rosy global economic prospects.

In its April 2019 World Economic Outlook (WEO) report released Tuesday evening Manila time, the Washington-based IMF cut its growth projection for this year from 6.6 percent previously, even as it projected growth next year at a slightly faster 6.6 percent.

The growth forecasts for the Philippines in the next two years were within the government’s downgraded target ranges of 6 to 7 percent for 2019 and 6.5 to 7.5 percent for 2020.

Due to slower growth in China amid trade tensions with the US alongside lost momentum in Europe and Japan, the IMF expects the global economic expansion to slow down to 3.3 percent this year from 3.6 percent last year.

Its global growth forecast for 2019 was also lower than the earlier projection of 3.7 percent in the October 2018 WEO.

“The current forecast envisages that global growth will level off in the first half of 2019 and firm up after that. The projected pickup in the second half of 2019 is predicated on an ongoing buildup of policy stimulus in China, recent improvements in global financial market sentiment, the waning of some temporary drags on growth in the euro area, and a gradual stabilization of conditions in stressed emerging market economies, including Argentina and Turkey,” the IMF said.

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 to within the 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.

Other multilateral lenders such as the also 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 the 2019 national budget, the prolonged dry spell due to El Niño, and a slowing external demand. /atm