IMF: PH to be ASEAN laggard

By Lawrence Agcaoili, The Philippine Star

Posted at Apr 18 2012 07:36 AM | Updated as of Apr 18 2012 08:36 PM

MANILA, Philippines - Multilateral lender International Monetary Fund (IMF) yesterday said the Philippines would be the laggard in economic growth among the Association of Southeast Asian Nations-5 (ASEAN-5) this year and in 2013.

In its latest World Economic Outlook (WEO), the IMF said the country’s gross domestic product (GDP) would grow 4.2 percent this year and 4.7 percent in 2013 after slackening to 3.7 percent last year from 7.6 percent in 2010 due to weak global trade and cautious spending by the Aquino government.

The projected GDP growth this year for the Philippines is slower than Indonesia’s 6.1 percent, Vietnam’s 5.6 percent, Thailand’s 5.5 percent and Malaysia’s 4.4 percent.

For next year, the country’s GDP forecast is also lower than Thailand’s 7.5 percent, Indonesia’s 6.6 percent, and Vietnam’s 6.3 percent but is at par with Malaysia’s 4.7 percent.

The IMF sees the GDP in ASEAN-5 expanding by 5.4 percent this year and 6.2 percent next year from 4.5 percent last year.

The multilateral lender sees the GDP in Asia growing six percent this year and 6.5 percent next year from 5.9 percent last year as activity across the region slowed during the last quarter of 2011, reflecting both external and domestic developments.

In emerging Asia, adverse market developments were correlated with countries’ reliance on euro area banks.

Euro area banks have already begun reducing their cross-border lending. Asian banks are generally in good financial health and many large Asian banks have sufficient capacity to step up lending further.

Last month, IMF mission chief for the Philippines Vivek Arora said the country would likely regain its potential growth rate of about five percent starting next year after slackening last year due to weak global trade.

Arora pointed out that the fiscal stimulus as well as the monetary policy stance of the Bangko Sentral ng Pilipinas (BSP) and strong remittances from overseas Filipino workers (OFWs) would boost domestic demand.

Based on its latest outlook, the IMF sees inflation easing to 3.4 percent this year before rising to 4.1 percent next year from 4.8 percent last year.

This is slower than Vietnam’s 12.6 percent, Indonesia’s 6.2 percent, and Thailand’s 3.9 percent but faster than Malaysia’s 2.7 percent.

For next year, average inflation in the Philippines would be slower than Vietnam’s 6.8 percent and Indonesia’s six percent, but faster than Malaysia’s 2.5 percent and Thailand’s 3.3 percent.

The IMF pointed out that the world growth economic prospect is expected to improve in the second half of the year as a result of the combined policy measures taken across developed and emerging market economies.