Philippine Daily Inquirer - - BUSINESS - —BENO. DE VERA

The In­ter­na­tional Mon­e­tary Fund said Philip­pine mon­e­tary au­thor­i­ties must watch out for fur­ther rise in in­fla­tion and tighten pol­icy when needed.

In its Oc­to­ber 2017 Re­gional Eco­nomic Out­look Up­date for Asia and Pa­cific, the IMF said that in the Philip­pines and In­done­sia, where in­fla­tion was close to tar­get, the cur­rent mon­e­tary stance should be main­tained but “au­thor­i­ties should be ready to tighten it if signs of in­fla­tion pres­sure emerge.”

The IMF ex­pects in­fla­tion in the Philip­pines to av­er­age 3.1 per­cent this year and 3 per­cent next year, still within the gov­ern­ment’s 2-4 per­cent tar­get range in the medium term but faster than the 1.8-per­cent uptick in the rate of in­crease in prices of ba­sic goods last year.

As of end-Septem­ber, head­line in­fla­tion av­er­aged 3.1 per­cent.

In Septem­ber, in­fla­tion rose to a five-month high of 3.4 per­cent year-on-year, which the gov­ern­ment had blamed mainly on higher food prices due to weather dis­tur­bances that month.

Dur­ing its Sept. 22 meet­ing on the mon­e­tary pol­icy stance, the Mon­e­tary Board kept key rates steady as the BSP’s high­est pol­i­cy­mak­ing body deemed that “the in­fla­tion en­vi­ron­ment re­mains man­age­able” and will be within tar­get in the next three years.

Also, the IMF said that in the Philip­pines and China, where credit was grow­ing rapidly, “coun­ter­cycli­cal macro­pru­den­tial mea­sures should be de­ployed or strictly en­forced.”

Mean­while, the re­port said that in the Philip­pines, growth was pro­jected to re­main close to po­ten­tial at 6.6 per­cent in 2017 and 6.8 per­cent in the medium term, driven by ro­bust do­mes­tic de­mand.

In Asean-5, which in­cluded the Philip­pines, In­done­sia, Malaysia, Thai­land and Viet­nam, the IMF noted that “growth in the first half of 2017 ac­cel­er­ated in most coun­tries com­pared with 2016.”

“The Philip­pines—where growth slowed from 6.9 per­cent in 2016 to 6.4 per­cent in the first half of 2017—was the ex­cep­tion, but it was still the fastest grow­ing coun­try in the group,” the IMF said.

Across In­done­sia, Malaysia, the Philip­pines, Singapore and Thai­land, av­er­age growth was ex­pected to hit 4.9 per­cent this year and in 2018 as “strong growth in these coun­tries is pri­mar­ily driven by higher in­vest­ment and ex­ports,” ac­cord­ing to the IMF.

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