Philippine economy remains 'exception' - IMF

By Kathleen A. Martin, The Philippine Star

Posted at May 08 2015 08:06 AM | Updated as of May 08 2015 04:06 PM

MANILA, Philippines - The Philippines will continue to be the “exception” in Asia and in the world as its economy is expected to continue its upward growth momentum, the International Monetary Fund (IMF) said.

“We see falling potential growth in the world and in Asia in general, but the Philippines is an outlier,” IMF resident representative Shanaka Jayanath Peiris said in a briefing yesterday.

Peiris said a big factor is the country’s demographics, as more and more Filipinos join the labor force. Another thing that will drive Philippine potential growth further is the rising investments, he said.

IMF’s current estimate of the Philippines’ annual potential growth is at six to 6.5 percent. Peiris said the IMF would update this figure during its Article IV Consultation slated next week.

The IMF last month increased its forecast for Philippine economic growth this year to 6.7 percent from an earlier projection of 6.6 percent. The latest estimate is faster than the 6.1 percent expansion recorded last year but still short of the government’s seven- to eight-percent target for 2015.

For next year, the IMF expects economic growth to slow down to 6.3 percent, also below the government’s seven to eight percent target for that period.

The Philippines should remain as Southeast Asia’s growth driver this year until the next, Peiris said, despite a slower first quarter growth versus the fourth quarter of last year.

“Manufacturing and exports are weaker, but domestic demand remains strong. This suggests that growth is overall strong… definitely stronger than first quarter of 2014 but may not be stronger than fourth quarter of 2014,” Peiris said.

Risks to growth this year include the slowdown in activity in Japan and in China, as they are among the biggest trade partners of the Philippines, the IMF official said.

Peiris said the divergence in monetary policies across advanced economies also pose a downside risk to the country and the region in general as they could lead to shifts in interest rates and possibly tighter financial conditions.

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