The International Monetary Fund (IMF) has lifted its growth outlook for the Philippine economy this year.
According to IMF Resident Representative for the Philippines Shanaka Jayanath Peiris, the growth outlook for the country has been lifted to 7 percent from its earlier forecast of 6 percent.
“Bottomline is, global outlook is lower including the BRICS [Brazil, Russia, India, China and Africa] and emerging markets. But for the Philippines, given the very strong growth in the first quarter and strong growth momentum for 2013, we’ve raised it to 7 percent from 6 percent,” he said.
Peiris added that for 2014, the IMF also revised its outlook to 6 percent from 5.5 percent.
The IMF outlook is higher compared to the 6.6-percent gross domestic product (GDP) expansion in 2012, and also at the higher end of the government’s 6-percent to 7-percent growth target this year.
Furthermore, Peiris lauded the robust 7.8-percent GDP growth the country recorded in the first quarter of 2013.
“Basically the first quarter [growth]was very strong at 7.8 percent. It’s really the economic growth momentum is quite high,” he added.
The IMF official further said that among the countries in the Association of Southeast Asian Nations (Asean), only the growth outlook for Philippines has been lifted.
“The region has been softer than expected. Most countries were reduced but the Philippines is the only outlier. It is the only one we are raising forecast significantly,” he added.
Peiris said that the outlook was based on the strong macroeconomic fundamentals of the country. He said that consumption remains robust while remittance is holding up quite well.
Cumulative overseas Filipino workers remittances from January to April this year continued to show strength, as it rose by 6.4 percent to $7.7 billion.
“The key things that come to mind, is that the Philippines is enjoying this demographic dividend. It has a labor force that is youthful, English speaking. Asean coming in by 2015 . . . macrofundamentals has been strong given the hard work in the past,” he added.
However, the IMF official said that there is still work to be done to maintain the strong growth that the country is experiencing now.
In the medium term, he said that there is a need for structural reforms on fiscal incentives and mining taxation.
Peiris also mentioned that efforts must also be made in terms of infrastructure spending and raising revenues.
He added that the government must also keep a level playing field that could support the investment climate and create greater competition for the businesses.
“Looking at other countries, what we found is that for this growth takeoff to be sustained, what you need is growth in investments. Investments have picked up but still low,” Peiris said.