Amro cuts 2019, 2020 growth forecasts for PH

The regional macroeconomic surveillance organization Asean+3 Macroeconomic and Research Office (Amro) has slashed its 2019 and 2020 growth projections for the Philippines to 6.3 percent and 6.5 percent, respectively.

This was contained in Amro’s Asean+3 Regional Economic Outlook July update which was released yesterday.

In its previous report, Amro projected a 6.4-percent growth for the Philippines for 2019 and 6.6 percent for 2020.

The slower growth forecasts were attributed by Amro to the “unexpected growth slowdown in the country’s first quarter growth due to the delay in the approval of the national budget.”

For the entire Asean+3, which, besides the 10-nation grouping, also included China, Japan and South Korea, Amro slashed its 2019 growth forecast to 4.9 percent from 5.1 percent previously “following continued weakness in manufacturing and export outturns.”

“The region’s export value continued to contract in May, with the exception of some countries, such as Vietnam and the Philippines,” Amro noted.

In a separate report, the Washington-based International Monetary Fund (IMF) also cut its 2019 growth projection for “Asean-5” to 5 percent from 5.1 percent previously.

Asean-5 groups the Philippines, Indonesia, Malaysia, Thailand and Vietnam.

The IMF’s World Economic Outlook (WEO) Update report released yesterday also lowered the 2020 growth outlook for Asean-5 to 5.1 percent from 5.2 percent in its April report.

The IMF sees global growth slowing to 3.2 percent this year and 3.5 percent next year from 3.6 percent last year and 3.8 percent in 2017.

“Global growth remains subdued. Since the April WEO report, the United States further increased tariffs on certain Chinese imports and China retaliated by raising tariffs on a subset of US imports. Additional escalation was averted following the June G20 summit. Global technology supply chains were threatened by the prospect of US sanctions, Brexit-related uncertainty continued, and rising geopolitical tensions roiled energy prices,” the IMF explained.

“GDP releases so far this year, together with generally softening inflation, point to weaker-than-anticipated global activity. Investment and demand for consumer durables have been subdued across advanced and emerging market economies as firms and households continue to hold back on long-term spending. Accordingly, global trade, which is intensive in machinery and consumer durables, remains sluggish. The projected growth pickup in 2020 is precarious, presuming stabilization in currently stressed emerging market and developing economies and progress toward resolving trade policy differences,” it added.

“Risks to the forecast are mainly to the downside. They include further trade and technology tensions that dent sentiment and slow investment; a protracted increase in risk aversion that exposes the financial vulnerabilities continuing to accumulate after years of low interest rates; and mounting disinflationary pressures that increase debt service difficulties, constrain monetary policy space to counter downturns, and make adverse shocks more persistent than normal,” according to the IMF.