WE are not at all surprised that the International Monetary Fund (IMF) decided this week to ‘review’ its Philippine growth outlook for 2015. In fact, if there’s one question we would like to ask the global lending giant it would be, “What took you so long?”
The IMF’s decision came in the wake of the unexpectedly low GDP growth rate of 5.2 percent in the first quarter of this year, which was far below the forecast range of 6 percent to 6.8 percent suggested by analysts and government officials. The IMF had predicted a growth rate of 7.3 percent prior to the release of the official data last Thursday.
We at The Manila Times have been consistent in our view over the past couple of years that the remarkable economic growth of the country over the same period of time has occurred in spite of President B.S. Aquino 3rd and his administration rather than being a positive result of anything he has done. Just yesterday, for example, The Times’ very own Ric Saludo and Ben Kritz discussed in their respective columns the impact (or lack thereof) of government spending on growth, and whether or not GDP growth is even being measured on a realistic scale.
To be fair to the IMF, they are not the only large organization to overestimate the Philippines, but simply one of a number of institutions whose assessments of the country’s economic prospects too often sound similar to the Aquino Administration’s rhetoric about “good governance,” “transparency,” and “inclusive growth.” And we must acknowledge that the IMF does regularly review and update its conclusions as economic conditions change. What is unusual this time is that the IMF made a point of announcing in advance that their forecast would be revised; in the past, the lender has typically waited until the release of a complementary report or analysis to announce revisions to its outlook.
One conclusion that could, and probably should be drawn from this is that the IMF is diplomatically warning the Philippines to prepare itself for bad news. While the IMF spokesman in a press briefing last week maintained an optimistic tone by stressing that the lender “still expects growth to pick up later in the year as exports recover with the global economy,” as well as getting a boost from increased public spending, the sunny outlook seemed a bit incongruent when offered alongside an announcement of a likely downgrade of the IMF’s forecast.
That news, when it comes, will probably be met with the usual response from Malacañang, always quick to take credit for favorable conditions, and just as quick to pin blame for the unfavorable on third parties or other outside forces. The Administration should, however, consider the implications of the IMF’s questioning of its own assumptions: Institutions that have been willing to give Aquino the benefit of the doubt are now beginning to see the divergence between the economy in numbers and the economy on the ground, which will undoubtedly lead them to less optimistic conclusions.
Even if the lowered expectations are minimal, a few tenths of a percentage point perhaps, the message investors and the public will hear is, “The economy is not doing as well as we thought.” Just as we have been saying all along. Now that the IMF, one global institution the Philippines seems to have a closer than usual relationship with, seems to be saying the same thing, perhaps the President and his office mates will start listening.