The International Monetary Fund (IMF) said it will announce lower forecasts for the Philippine economy for 2015 and 2016 in October to reflect the government’s recent downward revision to the first-quarter rise in gross domestic product (GDP).
The IMF had forecast 6.2 percent growth for the Philippines this year and 6.5 percent for 2016.
The IMF’s Philippine representative said the multilateral Fund remains optimistic about the country’s economy and sees a continued pick-up in growth, though with the low end of the forecast range closer to 6 percent than the previous projection of 6.2 percent.
Growth in Philippine GDP in the first quarter was revised by the government down to 5 percent from its previous estimate of 5.2 percent after a recent review of the numbers showed an overestimation of growth in three sectors namely, public administration and defense; mining and quarrying; and agriculture, hunting, forestry and fishing.
Such revision and the weakness in the global economic environment are expected to result in a lower growth forecast for the Philippines for 2015 and 2016, Shanaka Jayanath Peiris, IMF resident representative to the Philippines, said on Wednesday.
The IMF official said the new growth outlook for the Philippines will be released in October as part of the revision to the multilateral group’s World Economic Outlook report.
Despite this, Peiris said the IMF remains optimistic that the country will continue to see a general pick-up in growth – but closer to the 6 percent to 6.5 percent for 2015 and 2016.
“We still expect growth to gradually pick up through 2015 and into 2016 supported by an acceleration in public spending, a recovery in exports and continued accommodative monetary conditions,” he said.
The Philippines’ strong fundamentals should help cushion the economy from global financial market volatility with exchange rate flexibility serving as a shock absorber and supporting growth, he added.
Late last week, the government reported that the Philippine economy expanded 5.6 percent in the second quarter, which dragged the economy’s first-half performance to 5.3 percent from 6.2 percent a year earlier.
Following the announcement, five out of seven analysts who commented on the latest figures and released their new outlook for 2015 trimmed their growth projections for the full year, citing weak exports and uneven global growth as risks.
Analysts from the Bank of the Philippine Islands, Metropolitan Bank and Trust Co.
(Metrobank) Research, Singaporean bank DBS, London-based research consultancy firm Capital Economics, and United Kingdom-based investment bank Barclays expect the year’s growth in GDP in the range of 5.5 percent to 6.2 percent.
Meanwhile, analysts from Fitch Group’s think tank BMI Research and Standard Chartered Bank have chosen to keep their 2015 GDP outlook unchanged at 6 percent and 5.7 percent, respectively.