IMF retains Asean growth target, lowers global growth forecast

MANILA, Philippines - The International Monetary Fund (IMF) retained its growth outlook for Southeast Asian countries including the Philippines this year while lowering the growth projection for the global economy due to the projected slowdown in Japan after being devastated by an 8.9 magnitude earthquake and tsunami last March as well as the continued uncertainties in the US.

In its latest World Economic Outlook (WEO), IMF retained the projected gross domestic product (GDP) growth for the Association of Southeast Asian Nations-5 (ASEAN-5) at 5.4 percent this year and 5.7 percent next year or unchanged from its previous outlook.

Aside from the Philippines, other members of the ASEAN-5 include Indonesia, Malaysia, Thailand, and Vietnam. The IMF did not provide individual growth target for each member country in the latest WEO update.

Based on its WEO update last April, Vietnam is expected to post the fastest GDP growth this year with 6.3 percent followed by Indonesia with 6.2 percent, Malaysia with 5.5 percent, Philippines with five percent, and Thailand with 4.5 percent.

On the other hand, IMF said the GDP growth outlook for emerging and developing economies was upgraded to 6.6 percent instead of 6.5 percent this year but next year’s outlook was lowered to 6.4 percent instead of 6.5 percent.

“Growth in most emerging and developing economies continues to be strong,” the IMF explained.

The mutlilateral lender, however, slashed the projected world economic growth to 4.3 percent instead of 4.4 percent but retained next year’s growth forecast of 4.5 percent. The global economy expanded at an annualized rate of 4.3 percent in the first quarter.

“Activity is slowing down temporarily, and downside risks have increased again. The global expansion remains unbalanced. Growth in many advanced economies is still weak, considering the depth of the recession. In addition, the mild slowdown observed in the second quarter of 2011 is not reassuring,” the IMF stressed.

Data showed that the IMF slashed the projected GDP growth for advanced economies to 2.2 percent instead of 2.4 percent this year but retained next year’s projected GDP growth of 2.6 percent.

“For 2011, growth is expected to be weaker than previously projected in the US and Japan, partly offset by stronger activity in core euro area economies. In 2012, the rebound of the Japanese economy from the earthquake is forecast to offset weaker growth in the US,” it added.

The BSP lowered the GDP growth forecast for the US to 2.5 percent instead of 2.8 percent this year and to 2.7 percent instead of 2.9 percent next year.

“However, greater-than-anticipated weakness in US activity and renewed financial volatility from concerns about the depth of fiscal challenges in the euro area periphery pose greater downside risks,” the IMF said.

The lender upgraded the growth projections for the Euro area to two percent instead of 1.6 percent due to stronger growth from Germany and France.

The IMF, however, now expects Japan’s economy to contract by -0.7 percent instead of a growth of 2.8 percent this year but raised the projected growth next year to 2.9 percent instead of 2.1 percent.