The International Monetary Fund (IMF) has maintained its 2016 and 2017 Philippine growth forecasts, but noted the increase in downside risks for the outlooks.
In the April edition of its “World Economic Outlook” report, the IMF said the Philippine real gross domestic product (GDP) growth was still likely to hit 6 percent this year and 6.2 in 2017.
“Real GDP growth is projected at 6.0 percent in 2016 and 6.2 percent in 2017, unchanged from the February 2016 IMF mission statement, driven by continued strong domestic demand and modest fiscal stimulus in 2016,” Shanaka Jayanath Peiris, IMF Resident Representative to the Philippines, told reporters in an e-mail on Tuesday.
The IMF forecasts were lower than the government’s 6.8 percent to 7.8 percent target for 2016 as well as the 6.6 percent to 7.6 percent range set for 2017.
GDP growth eased to 5.8 percent last year from 6.1 percent in 2014 on the back of a slowdown in exports and other factors.
“Monetary conditions also remain supportive of growth,” Peiris said.
The IMF representative said the Philippine economic outlook is one of the strongest in the region but that it is subject to increased downside risks, including lower growth in China and the region, higher global financial volatility and capital outflows, and weather related disruptions.
Nevertheless, Peiris stressed that the Philippines’ capacity to respond if these risks materialize is substantial, given its ample reserves and policy space, both monetary and fiscal.
Over the medium term, the IMF said a continuation of prudent macroeconomic policies and good governance would be critical to sustain investor confidence and the growth momentum.
“To support growth, structural reforms will also be needed to raise the low rate of government revenue and infrastructure investment, opening up the economy to greater competition and foreign investment, and benefiting from the demographic dividend by addressing skill mismatches and inequality of opportunity,” Peiris said.