IMF trims PH growth outlook
Credit to Author: ANNA LEAH E. GONZALES| Date: Thu, 25 Jul 2019 16:19:52 +0000
THE International Monetary Fund (IMF) has downgraded the Philippines’ economic growth forecast for this year and next because of weak external demand and the delayed approval of this year’s national budget.
In an emailed statement, Yongzheng Yang, the Washington-based financial institution’s resident representative to the Philippines, said economic growth was likely to hit 6.0 percent in 2019 and 6.3 percent in 2020, trimmed from the IMF’s previous estimates of 6.5 percent and 6.6 percent, respectively.
The revised figures are similar to the Asian Development Bank’s current projection of 6.2 percent for this year and 6.4 percent for next year; the World Bank’s 6.4 percent for 2019 and 6.5 percent for 2020; and the Asean+3 Macroeconomic Research Office’s 6.3 percent and 6.5 percent for this year and next, respectively.
All fall within the 6.0- to 7.0-percent downwardly revised 2019 growth target of the country’s economic managers. For 2020, the target is between 6.5 and 7.5 percent.
“The downward revisions mainly reflect weaker-than-expected external demand and…public investment, partly due to the delayed approval of the 2019 budget,” said Yang.
A dispute between the Senate and House of Representatives over alleged insertions resulted in the four-and-a-half month delay in the passage of this year’s national outlay.
This forced the government to run on last year’s budget, unable to spend on projects and programs supposed to be implemented this year.
The delayed approval resulted in the country posting a slower-than-expected growth rate of 5.6 percent in the first quarter, compared with 6.5 percent in January to March 2018.
Despite the slashed forecasts, Yang said these were still among the highest in the region, adding that “growth will continue to be driven by strong domestic demand.”
Yang’s statement came after the IMF announced that it reduced its global growth projection to 3.2 percent from 3.3 percent this year and to 3.5 from 3.6 percent in 2020.
In its quarterly update of its World Economic Outlook report, the IMF said the “GDP (gross domestic product) 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,” it added.
“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.”
The multilateral institution also forecast growth in emerging and developing Asia to hit 6.2 percent this year and next, saying the figure was “0.1 percentage point lower than in the April WEO for both years, largely reflecting the impact of tariffs on trade and investment.”
The Asean (Association of Southeast Asian Nations) 5 — Indonesia, Thailand, Malaysia, Vietnam and the Philippines — is also seen to grow by 5.0 percent in 2019 and 5.1 percent in 2020, down from the previous 5.1 percent and 5.2 percent, respectively.
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