ASIA TO KEEP FUELING GLOBAL GROWTH – IMF

THE International Monetary Fund (IMF) has raised its forecast for Asia’s growth to 4.5 percent from 4.2 percent, with the region also expected to contribute two-thirds to global economic expansion.

“Clearly, we see that prospects for soft landing have improved,” IMF’s Asia and Pacific Department Director Krishna Srinivasan said in a briefing on Wednesday.

“Global growth has proven surprisingly resilient and inflation continues to decline steadily. Stronger private and government spending upheld demand in 2023, despite tight monetary conditions,” Srinivasan added.

“On the supply side, higher labor force participation, the unwinding of supply chain bottlenecks and lower energy prices all supported activity.”

Srinivasan said that positive momentum from last year would continue into 2024.

“For 2025, we project growth in the region to decelerate mildly to 4.3 percent, reflecting to a large extent China’s growth slowdown,” Srinivasan said.

For the Philippines, IMF Regional Office for Asia and the Pacific Director Akihiko Yoshida reiterated that growth likely bottomed out last year and rebound to 6.0 percent in 2024.

But while the outlook for the country is favorable, Yoshida said that near-term risks were tilted to the downside.

These include high inflation that could lead to further monetary tightening, a slowdown in global economic growth, increased geoeconomic fragmentation, a broadening array of global risks and more restrictive global financial conditions.

“We expect inflation to approach the target of 3 percent in the second half of 2024. The risk to the inflation outlook is tilted to the upside, reflecting risks of food price surges and potential secondround effects,” he added.

Srinivasan said that average inflation in Asia fell from 3.8 percent in 2022 to 2.6 percent last year, particularly improving in emerging economies.

“Many regional central banks are on course to reach their inflation targets in 2024,” Srinivasan said.

“Provided policymakers hold steady until inflation is firmly reanchored, scope for monetary easing may emerge later in the year.”

The Bangko Sentral ng Pilipinas’ benchmark rate is currently at 6.5 percent, the highest since 2007, following 450 basis points of hikes starting in May 2022 due to surging inflation.