IMF raises Philippine 2015 GDP growth forecast

Reuters

Posted at Apr 01 2015 09:34 AM | Updated as of Apr 02 2015 07:09 PM

MANILA - The International Monetary Fund on Wednesday slightly upgraded its forecast for Philippine economic growth to 6.7 percent this year from 6.6 percent, due in part to higher state spending and strong private construction activity.

The Philippine government expects growth of 7 to 8 percent this year, after 6.1 percent expansion in 2014.

Inflation is expected to stay at the lower end of the central bank's 2-4 percent target range this year, the IMF said after the end of a staff mission to the Philippines.

"The fiscal stance should provide a stimulus as budget execution picks up in 2015/16 toward the 2 percent of GDP deficit target, while monetary and macroprudential policies continue to anchor inflation and financial stability," the fund said in a statement.

The IMF said risks to the outlook come from disruptive asset price shifts in financial markets due to divergent monetary policies in advanced economies, and possible weaker external demand if developed countries are hit by deflation and lower growth.

But it said the central bank's pre-emptive policy moves last year, that brought more moderate liquidity and credit growth, reduce financial stability risks, and its proactive approach to overseeing the financial sector, particularly real estate exposures, lends support.

The current account surplus will likely widen with improving export growth, as well as strong inflows from business process outsourcing, remittances and tourism and lower oil prices, the fund also said.