THE Philippine economy is poised to grow stronger in the long term, especially if the government pursues vital economic reforms, International Monetary Fund resident representative to the Philippines Yongzheng Yang said Friday.
Yang cited the implementation of tax reform and fiscal prudence while meeting development needs, and the amendment to the charter of Bangko Sentral ng Pilipinas.
“The economy is robust and the outlook is robust… the economy has great prospects. This is a good opportunity to implement reforms to sustain growth and make it inclusive,” Yang said.
The IMF earlier projected the Philippine economy to grow this year by 6.6 percent and 6.7 percent in 2018. The IMF also predicted the economy to expand stronger by 6.8 percent from 2019 to 2022.
He said amending the Bangko Sentral charter would make the regulator function more effectively, especially in the area of price and financial stability.
Despite the bright growth prospects, Yang warned that risks both from external and domestic fronts could hinder economic growth going forward.
On external front, he cited the impact of the US monetary policy tightening, where another rate hike could be possible before the close of the year. He said another rate hike could affect financial conditions globally, including the Philippines.
Yang also cited the sharp economic slowdown in China, the global financial market volatility, and policy uncertainty in the US and Brexit.
He said the spillovers to the Philippines from the external risks would be in the form of trade of goods and services, capital flows, asset prices and exchange rate.
On the domestic front, Yang cited the potential overheating due to rapid credit growth, natural disasters as well as security-related events.
The first package of the Comprehensive Tax Reform Program (Tax Reform for Acceleration and Inclusion Act or TRAIN) was approved by the House of Representatives in May. The Senate is currently deliberating on the measure.
Finance Secretary Carlos DomingueZ III remained optimistic the TRAIN could be signed into law before the close of the year to allow the government to implement the tax reform in January next year so that its benefits could be felt at the soonest possible time.
The economy grew 6.9 percent in the third quarter, faster than the expectations of most economists, on the back of the strong performance of industry and services sectors.
This brought the year-to-date growth to 6.7 percent, above the lower limit of the official target range of 6.5 percent to 7.5 percent this year.
