MANILA, Philippines - The International Monetary Fund (IMF) lifted its growth outlook for the Philippines this year to 4.8%, and 4.9% in 2013. This comes a day after the World Bank raised its growth forecast for the Philippines to 4.6% for 2012.
"Macroeconomic conditions remain generally sound and the authorities' policy management is supporting confidence. Like other countries in the region, the Philippines faces a more fragile global economic environment that could produce headwinds in the coming quarters," it said, in a statement issued at the end of its 4-day staff visit to Manila.
"Going forward, growth is expected to stabilize to 4.8% and 4.9% in 2012 and 2013, respectively, in line with soft global economic conditions in the baseline," it said.
The IMF's new growth projections were higher than its earlier projection of 4.2% for 2012, and 4.7% for 2013.
However, these are still lower than the Philippine government target of 5-6% growth for 2012, and 6-7% in 2013.
While the current global economic environment is a key downside risk to the outlook, the IMF said if the Philippine economy continues to sustain its growth momentum as seen with the 6.4% growth in the first quarter, "growth could surprise on the upside."
The IMF said the Philippines faces the near-term challenge of "maintaining macro-financial stability given the expectation for robust growth and strong capital inflows in the baseline, while building the foundations for higher and more inclusive growth."
The IMF said the central bank has the policy space to support growth if needed.
"The current account and overall balance of payments are forecast to remain in surplus and inflation is expected to remain well within the target. Public finance continues to improve while the financial system has sustained its resiliency notwithstanding the more challenging external markets," it said.
The IMF staff team, led by mission chief Rachel van Elkan, was in Manila from July 16 to 19. The mission met with Bangko Sentral ng Pilipinas (BSP) Amando Tetangco, Finance Secretary Cesar Purisima, Budget Secretary Florencio Abad and Socio-economic Planning Secretary Arsenio Balisacan.