The International Monetary Fund expects the Philippine economy to grow 6.5 percent in 2019, faster than the 6.2-percent expansion last year, despite the external challenges.
It said in the April 2019 World Economic Outlook that the Philippines, together with Vietnam, would post the fastest growth among the major economies of the Association of Southeast Asian Nations this year.
The 2019 growth forecast was slightly slower than the 6.6-percent estimate the IMF released in October 2018, as a number of economic uncertainties, trade tensions and policy normalization could affect most economies this year.
It said growth in the Philippines could reach 6.6 percent in 2020, the fastest in the region. It is followed by Vietnam at 6.5 percent, based on the accompanying table of GDP projections.
IMF resident representative to the Philippines Yongzheng Yang was not available for comment Tuesday but he said in a forum last month that the Philippine economy could expand stronger this year than the lower-than-expected 6.2-percent in 2018, on robust domestic demand amid the slowdown in the inflation rate.
“Philippine growth will remain robust on the back of strong domestic demand. There is also strong confidence of the business sector with the Philippine economy,” Yang said. He did not give a specific number during the forum.
Inflation peaked at 6.7 percent in September and October 2018 but eased to 6 percent in November and 5.1 percent in December as the measures implemented by the government to curb the rising prices took effect. This brought the full-year inflation rate in 2018 to 5.2 percent, above the target range of 2 percent to 4 percent.
Inflation further eased to 4.4 percent in January, 3.8 in February and to a 15-month low of 3.3 percent in March 2019, bringing the first quarter average to 3.8 percent.
The IMF noted the challenges in the global economy this year. It said “the escalation of US-China trade tensions, needed credit tightening in China, macroeconomic stress in Argentina and Turkey, disruptions to the auto sector in Germany, and financial tightening alongside the normalization of monetary policy in the larger advanced economies have all contributed to a significantly weakened global expansion, especially in the second half of 2018.”
“With this weakness expected to persist into the first half of 2019, our new World Economic Outlook projects a slowdown in growth in 2019 for 70 percent of the world economy. Global growth softened to 3.6 percent in 2018 and is projected to decline further to 3.3 percent in 2019,” it said.
IMF said that after the weak start, global growth was projected to pick up in the second half of 2019, supported by significant monetary policy accommodation by major economies, made possible by the absence of inflationary pressures despite growing at near potential.
“The US Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England have all shifted to a more accommodative stance. China has ramped up its fiscal and monetary stimulus to counter the negative effect of trade tariffs. Furthermore, the outlook for US-China trade tensions has improved as the prospects of a trade agreement take shape,” the IMF said.
The IMF said with improved prospects for the second half of 2019, global growth in 2020 was projected to return to 3.6 percent, predicated on a rebound in emerging market and developing economies where growth is projected to increase from 4.4 percent in 2019 to 4.8 percent in 2020.
It said beyond 2020, global growth was expected to stabilize at around 3.5 percent, bolstered by growth in China and India and their increasing weights in world income.
