IMF sees GDP growth of 3.3% this year

MANILA, Philippines - The International Monetary Fund (IMF) said yesterday it expects the economy to grow around 3.25 percent this year, slightly lower than a growth estimate it made in November, powered mainly by consumer spending.

In November, the IMF gave a forecast of 3.5-percent growth for the Philippines in 2010.

The IMF said in a statement the Philippines’ monetary policy should remain accommodative until it reaches a sustainable growth path.

“A timely return toward a sustainable fiscal path while avoiding a premature exit from a supportive monetary policy will be important, along with continued reforms to ensure sustained growth in the medium term,” the IMF said.

The growth forecast was also within the target set by economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) ranging between 2.6 percent and 3.6 percent this year.

In its Public Information Notice released yesterday, IMF said the country’s GDP growth this year would be fueled by private consumption on the back of robust overseas Filipino workers’ remittances.

“Recovery is expected in 2010, led by private demand as confidence and remittances improve,” the IMF said.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that money sent home by Filipinos abroad went up by 5.6 percent to a new record level of $17.35 billion last year from $16.43 billion in 2008.

IMF said investment and exports would also benefit from the global recovery.

The international lender said output losses from the devastation caused by tropical storm Ondoy last September and typhoon Pepeng last October turned up to be larger than expected and resulted in a fiscal blowout.

“On the domestic side, the output losses from the devastation caused by the two recent typhoons could turn out to be larger than currently estimated, and fiscal slippage could raise investor concern,” the IMF said.

However, IMF said post-typhoon rebuilding efforst could spur higher investments.

The country’s GDP growth eased to 0.9 percent last year from 3.8 percent in 2008 due to the full impact of the global economic meltdown while the budget deficit swelled to a new record level of P298.5 billion or 3.9 percent of GDP last year from P68.1 billion or 0.9 percent in 2008.

The IMF expected the deificit to reach 4.5 percent of GDP last year overshooting the budget target of 3.75 percent of GDP after fiscal policy was loosened in response to the crisis that was aggravated by poor revenue performance.

This year, the IMF sees the country’s budget deficit narrowing to 3.3 percent of GDP.

The IMF likewise expects inflation to average 4.3 percent this year from last year’s 3.2 percent. The inflation forecast of IMF was well within the BSP inflation target of between 3.5 percent and 5.5 percent this year.