IMF raises Phl growth forecast

MANILA, Philippines - The International Monetary Fund (IMF) raised yesterday its economic growth projections for the Philippines for this year and the next while cutting the global outlook, saying the country will get a boost from higher public spending and lower oil prices.

 “The growth forecasts for 2015 and 2016 have been raised to 6.6 percent and 6.4 percent, respectively, reflecting the boost from lower global oil prices and anticipated pick up in government spending from the low base in 2014,” IMF resident representative Shanaka Jayanath Peiris said in an e-mail.

Both figures were higher than the IMF’s previous projections of 6.3 percent for 2015 and 6.2 percent for 2016 but below the government’s seven to eight percent goals for said years.

For 2014, Peiris said the IMF downgraded its economic growth forecast for the Philippines to 5.8 percent from a previous estimate of 6.2 percent.

 “This is reflecting the outcome for the first three quarters related to lower agricultural output and government spending,” Peiris said.

Philippine economic growth eased to a lower-than-expected 5.3 percent in the third quarter of 2014 from 6.4 percent in the previous three months, blamed largely on lower public spending.

This brought the nine-month GDP growth to 5.8 percent, still below the government’s 6.5 to 7.5 percent target for the year.

The fourth quarter and 2014 gross domestic product data will be released by the government next week.

The upward revisions for Philippine economic growth was made parallel to a cut in global output for this year and the next on weaker economic activity in China, Russia, the euro zone, and Japan, as well as in some major oil exporting countries.

In its latest World Economic Outlook (WEO) Update released yesterday, the IMF cut its projection for global output to 3.5 percent for 2015 and to 3.7 percent in 2016. Both are 0.3 percent lower than the forecasts announced in October.

The IMF stressed the uncertainty about oil price movements and the timing of the rise of interest rates in the US pose as risks to global growth.

 “On the upside, the boost to global demand from lower oil prices could be greater than is currently factored into the projections, especially in advanced economies,” the IMF said.

“But oil prices could also have overshot on the downside and could rebound earlier or more than expected if the supply response to lower prices is stronger than forecast,” the IMF said.

Bouts of volatility, meanwhile, remain elevated in global financial markets, the IMF said, adding a “potential trigger” could be monetary policy normalization in the US.

 “Emerging market economies are particularly exposed, as they could face a reversal in capital flows,” the IMF said.