The International Monetary Fund (IMF) is set to review its Philippine growth outlook for the full year to consider the impact of the economy’s weaker-than-expected performance in the first quarter.
The country’s gross domestic product (GDP) grew 5.2 percent in the first quarter of 2015, the slowest since the fourth quarter of 2011. The rate was far behind the 7.3 percent expansion the IMF had expected for the first three months, and fell below the range of forecasts by private analysts of between 6 and 6.8 percent.
“Overall, the significant negative surprise in the first quarter and base effects going forward mean that our 6.7 forecast for 2015 will be reviewed before the next World Economic Outlook (WEO) forecast release,” Shanaka Jayanath Peiris, IMF resident representative to the Philippines said in an e-mail to reporters over the weekend.
The WEO presents the IMF’s analyses and projections of economic developments at the global level in major country groups and in many individual countries. It is released in April and September/October each year.
“The first-quarter GDP outturn was somewhat below the IMF forecast due partly to temporary factors such as weak agriculture production, exports and public spending,” Peiris said.
He also noted that although there are still positive indicators that may lift growth during the rest of the year, downside risks still persist particularly the impact of El Nino phenomenon.
Peiris said the IMF still expects growth to pick up later in the year as exports recover with the global economy, and public spending accelerates with the measures that are being put in place by the Department of Budget and Management and the President’s Administrative Order 46, which directs agencies to make better use of their fund releases.
“The impact of El Niño on weak agriculture production may persist but the share of agriculture is small and the impact will probably be felt more on inflation than GDP,” he concluded.
For full-year 2015, the government held on to its projection of 7 percent to 8 percent growth despite the sharp slowdown in the first quarter, with Socioeconomic Planning Secretary Arsenio Balisacan citing an improvement in the latest business and consumer confidence for the next quarter.
Most private analysts have also left their economic growth forecasts for the year unchanged even after the negative surprise from the economy’s first-quarter performance, as they began focusing on a possible rebound in the second half of the year with the expected increase in election-related spending ahead of 2016.