MANILA, Sept 24: The International Monetary Fund slightly lowered its growth forecast for the Philippines this year but said the country was well positioned to deal with any capital outflows when the US Federal Reserve cuts its stimulus programme.
In a statement on its website, the IMF said it expects Philippine economic growth to remain strong at 6.75 percent this year and 6 percent next year, supported by solid private and public consumption. The 2013 projection is lower than the 7 percent estimate the IMF made in July, while the forecast for next year was unchanged.
The fund’s estimate is near the top end of the government’s 2013 growth goal of 6-7 percent.
‘When tapering does eventually begin, the Philippines’ strong fundamentals… Position the economy to adjust smoothly to accompanying capital flow reversal and slow down in regional growth,’ said the IMF, whose staff completed a visit to Manila last week.
A retreat from emerging markets has seen the peso fall about 5 percent this year. The stock market has clawed back from heavy losses in recent months and is up around 11 percent this year, making it the second best performer in Southeast Asia after Vietnam.
The inflation rate is expected to climb gradually due to the peso’s weakness and sustained demand pressures, but it will likely stay within the central bank’s 2013 target band of 3-5 percent, the IMF said.
The IMF said the Philippines will continue to enjoy current account and balance of payments surpluses, underpinned by remittances from Filipinos working abroad and receipts from the business process outsourcing sector.
The Philippine economy grew a robust 7.5 percent in the second quarter, matching China’s pace and defying a slowdown in neighbouring countries, but it has only been able to attract paltry levels of foreign direct investment.
To attract foreign investors, the Philippines should allow more foreign ownership in economic sectors, execute public private partnerships in a timely and transparent manner and remove regulatory bottlenecks, the IMF said. (agencies)
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