The International Monetary Fund said Tuesday the Philippine economy likely grew 5.7 percent last year and is expected to rebound with a more than 6-percent expansion in 2016 and 2017.
IMF resident representative to the Philippines Shanaka Jayanath Peiris said while the multilateral lender slightly slightly reduced the growth forecasts for the Philippines, the country would remain one of the fastest growing in Asia.
“The growth estimate for 2015 was revised down to 5.7 percent from 6 percent, reflecting growth outturns in the third quarter and weaker global growth performance,” Peiris said in an e-mailed statement.
The IMF estimate is below the government’s growth target of 7 percent to 8 percent for 2015 and lower than the actual GDP expansion of 6.1 percent in 2014 and 7.1 percent in 2013. The government will release the official 2015 growth figures later this month.
IMF also cut the growth forecast for 2016 to 6.2 percent from the previous estimate of 6.3 percent, due to external headwinds.
“The Philippines growth outlook remains one of the strongest in the region. Despite the weaker global economic outlook, the Philippines growth forecast for 2016 was only marginally lowered from 6.3 to 6.2 percent to reflect the more challenging external environment,” he said.
“The growth projection for 2017 remains unchanged from the October WEO [world economic outlook] at 6.5 percent. We expect the Philippine economy to continue growing strongly, supported by a robust private domestic demand and some recovery in export growth after the dismal global trade performance in 2015,” Peiris said.
He said public sector expenditure was also expected to contribute strongly to growth as budget execution improved and the construction phase of a number of public-private partnership projects kicked in.
Peiris said the medium-term economic outlook was based on an assumption of continued prudent macroeconomic policies and greater investments in infrastructure and human capital to benefit from the demographic dividend, supported by low levels of public and private debt.
He said risks to the global outlook remained tilted to the downside and related to ongoing adjustments in the global economy including a generalized slowdown in emerging market economies, China’s rebalancing, lower commodity prices and the gradual exit from extraordinarily accommodative monetary conditions in the United States.
Peiris said the Philippines was relatively less exposed to China given the low trade and financial linkages and stood to benefit from the lower commodity prices.
“However, a generalized slowdown in growth in the region, tighter external financial conditions due to monetary policy normalization in the US and sudden spikes in global risk aversion are downside risks. The Philippines is well positioned to deal with external shocks because of its strong fundamentals and ample policy space,” Peiris said.
He said the Philippines’ current policy configuration appeared appropriate, amid the strong growth outlook and anticipated higher inflation towards the target range in 2016 and 2017. He said policies could be recalibrated if the downside risks “were to materialize.”
The latest IMF world economic outlook report also said that Asean-5, which includes the Philippines, likely grew by 4.7 percent in 2015, and was expected to expand to 4.8 percent this year and 5 percent in 2017.