MANILA - The International Monetary Fund has upgraded its Philippine economic growth forecast this year to 6.9 percent from 6.6 percent but warned of downside risks due to uncertainties brought by the pandemic.
The upgrade was attributed to the stronger than expected fourth quarter gross domestic product growth and "expansionary" fiscal policy stance, IMF resident representative to the Philippines Yongzheng Yang told ANC.
Unused funds from the 2020 budget and the emergency response Bayanihan laws, which will be carried over to 2021, can boost fiscal stimulus this year, he said.
"Taking these two factors, we thought there is ground for upgrade in the forecast. But of course, since then things have changed quite rapidly. This is a significant downside risk that we will take into account going forward," Yang said.
"Overall we’re facing uncertainty and any forecast should be viewed that way and be revised as new information comes in," he added.
The government on Wednesday announced that Metro Manila and 4 adjacent provinces would remain under modified enhanced community quarantine for 2 more weeks or until May 14.
Experts have said quarantine restrictions could negatively affect growth, but improved global prospects could serve as a boost, the IMF official said.
When asked if the worsening COVID-19 cases in India could affect the Philippines' growth prospect, he said "direct impact maybe not huge partly because there is relatively smaller trade between Philippines and India compared to large countries."
The IMF noted the country's healthy gross international reserves that hit $109.08 billion by the end of February.
Economic managers have been reiterating that the country's solid macroeconomic fundamentals have helped speed up COVID-19 response and have mitigated overall pandemic impact to the economy.
The Asian Development Bank earlier said the Philippine economy could grow by at least 4.5 percent this year, while Socioeconomic Planning Secretary Karl Kendrick Chua earlier said the government approved a growth forecast of 7.5 percent this year.