IMF retains Phl growth outlook

Multilateral lender International Monetary Fund (IMF) has retained its 2018 economic growth forecast for the Philippines despite an upward revision in its growth projection for global economic growth in its latest World Economic Outlook (WEO).

YongZheng Yang, IMF resident representative for the Philippines, said there was no change in the gross domestic product (GDP) growth projection for the Philippines.

“There was no revision to the GDP growth projection for the Philippines in the latest WEO update,” Yang said.

In its country report last November and based on the WEO update released last October, the IMF expected the Philippines economy to expand by 6.6 percent in 2017 and by 6.7 percent in 2018.

“The outlook for the Philippine economy is favorable despite external headwinds. Real GDP growth is projected at 6.6 percent in 2017 and 6.7 percent in 2018, owing to continued robust domestic demand,” the IMF said in a report.

It said the strong performance of the economy has continued, with rapid economic growth and low inflation.

“Economic growth is projected to remain high, supported by robust domestic demand, while inflation is expected to remain near the center of the target band,” it said.

However, the IMF said credit growth has accelerated, and although most indicators find no evidence of credit booms so far, some indicators suggest that credit gaps could approach early warning levels in 2017 to 2018.

“The combination of high credit growth, buoyant private investment, and fiscal expansion without tax reform could lead to overheating of the economy,” it said.

The IMF noted the approval of the first tax reform package would lead to a sustainable increase in infrastructure investment.

Yang said the numbers published in the last country report in November remain valid.

In the latest WEO update released Monday evening, the IMF raised the GDP growth forecast for the Association of Southeast Asian Nations (ASEAN) to a range of 5 to 5.3 instead of 5.2 percent for 2018 and retained the projection at 5.3 percent in 2019.

ASEAN-5 includes the Philippines, Indonesia, Malaysia, Thailand and Vietnam.

On the other hand, the IMF raised the projected world output by 0.2 percent to 3.9 percent from the original target of 3.7 percent for both 2018 and 2019, faster than the 3.7 percent GDP growth forecast for 2017.

“Global economic activity continues to firm up,” the IMF said in the latest WEO update.