|
By Maricel E. Burgonio, Reporter
The International Monetary Fund (IMF)
has lowered its economic-growth forecast for the Philippines, which
is poised to be the second-worst performer in Southeast Asia this
year.
In its latest World Economic
Outlook, the Philippines’ economic growth, as measured by gross
domestic product (GDP), is expected to reach 5.8 percent this year,
lower than the original projection of 6 percent and last year’s
actual growth of 7.3 percent. GDP refers to the total market value
of final goods and services produced within a country in a year.
Strong domestic consumption is
expected to drive the country’s growth this year, fueled by
expected strong remittance inflows from the millions of overseas
Filipino workers. But growth is expected to be affected by a global
economic slowdown, resulting from the US subprime mortgage crisis,
the IMF said.
“IMF cited that robust domestic
demand, led by consumption, supports the growth of Indonesia,
Malaysia, Hong Kong SAR [Special Administrative Region], Philippines
and Singapore, while export growth began to show some signs of
moderation,” according to the report.
Philippine export growth declined
by 5.2 percent to $4.241 billion as of January, compared with
$3.9987 billion in the same period last year. Exports in the
previous month reached $4.472 billion.
In the IMF’s Philippines Staff
report, experts earlier suggested that the government should improve
its revenue effort to post faster economic growth this year, which
would likely be 6.3 percent. This will help government meet its
priority targets, such as infrastructure development, as current
reforms will only allow the economy to grow modestly, they added.
The Association of Southeast
Asian Nations (Asean) member countries—including Indonesia,
Thailand, Philippines, Malaysia and Vietnam—is projected to post a
GDP growth of 5.8 percent this year, lower than last year’s 6.3
percent.
Vietnam is expected to post the
highest growth this year with 7.3 percent, followed by Indonesia at
6.1 percent, Thailand at 5.3 percent, and Malaysia at 5 percent.
But the strength of domestic
demand in the region, combined with rising food and energy prices,
has contributed to a buildup of inflation pressures in a number of
countries.
“Inflation pressures have also
begun to emerge in Indonesia, Thailand, and the Philippines,”
according to the IMF.
In the Philippines, inflation or
increase of prices in March increased to 6.4 percent from the
previous year, and in February, the increase was 5.4 percent
compared with the same period in 2007. That reflects the impact of
negative global developments, particularly the unprecedented surge
in both oil and non-oil commodity prices, the IMF said. But the
relative firmness of the peso against the US dollar continues to
cushion the impact of higher imported oil and food prices on
domestic inflation.
In terms of GDP growth in
emerging Asia, IMF said it is expected to decelerate this year but
remain robust at about 7.5 percent in 2008 and 7.8 percent in 2009,
compared with 9.1 percent last year, as growth in the newly
industrialized countries and other Southeast Asian nations are
expected to weaken.
In light of the greater
uncertainties associated with the outlook, policymakers face a
difficult task in balancing the trade-offs between growth and
inflation.
“The challenge remains to avoid
overheating, which may require tighter monetary policy, supported by
greater exchange rate flexibility in some countries,” the IMF
said.
“Policymakers will need to
respond flexibly, however, to evolving developments, with some scope
for monetary policy easing in the event of a sharper than
anticipated slowdown in countries where inflation expectations
continue to remain well above anchored,” it added.
Moreover, the IMF said capital
inflows in emerging economies are projected to slow this year as a
consequence of the tightening of global financial conditions.
But the lender expects the direct
impact of the US subprime mortgage crisis on regional financial
systems has been limited.
|
