IMF maintains Philippine growth forecast for now

THE International Monetary Fund (IMF) is so far maintaining its Philippine growth forecast for this year, despite slashing its growth outlook for the world and China as the global spread of the coronavirus disease 2019 (COVID-19) continues to disrupt economic activity.

Sought for comment on the impact of the virus on the Philippine economy, IMF Resident Representative Yongzheng Yang said they will discuss this “when the situation becomes clearer and numbers are available in due course.”

“We don’t have updated forecasts for the Philippines at the moment,” he said in an e-mail.

Earlier this month, Mr. Yang said they maintained their 2020 growth forecast for the country at 6.3% even as the outbreak is seen to negatively affect the tourism sector.

This forecast is below the government’s target of 6.5-7.5% growth this year but is better than the actual 5.9% print seen in 2019. The 2019 pace failed to hit the 6-6.5% target set by the government for that year.

Mr. Yang earlier said the country is “not immune” to the economic risks of the coronavirus, including its negative impact on the tourism industry, among others.

However, he said that the reduction of key policy rates by the Bangko Sentral ng Pilipinas (BSP) will be able to somehow cushion the virus’ effect on the economy.

The rates on the BSP’s reverse repurchase, overnight lending and deposit facilities currently stand at 3.75%, 4.25%, and 3.25%, respectively, after the Monetary Board cut rates by 25 basis points (bps) on Feb. 6.

BSP Governor Benjamin E. Diokno said the central bank may cut rates by another 25 bps as early as the second quarter to help shield the country from the economic fallout from the spread of COVID-19.

Mr. Diokno earlier said gross domestic product (GDP) growth could be dented by an average of 0.3% in the first two quarters if the virus outbreak will last until June.

Meanwhile, the National Economic and Development Authority has said the virus could hurt economic growth by 0.3% if the outbreak stays longer or until June, which could rise to 0.7% of GDP if the virus lingers until December, largely due to impact on the tourism sector.

So far, only one fatality and three infections have been recorded in the country.

In a speech at the G20 Finance Ministers and Central Bank Governors Meeting held at Saudi Arabia on Saturday, IMF Managing Director Kristalina Georgieva said they reduced the outlook for global growth and China’s economic expansion in 2020.

With this, their outlook for global growth has been trimmed by 0.1 percentage point to 3.2%, while its forecast for China’s growth has been reduced to 5.6% from the six percent penciled in the IMF World Economic Outlook Update published in January. —