IMF Cuts 2019 GDP Forecast for PH to 6.5%

The International Monetary Fund (IMF) slashed its 2019 growth projection for the Philippines from 6.6 percent to 6.5 percent after considering the impact of softer global economic output due to increased trade tensions and tariff increases.

Based on its World Economic Outlook (WEO) released April 9, the Washington, DC-based agency said that after nearly two years of broad-based expansion, global growth slowed in the second half of 2018.

“Activity softened amid an increase in trade tensions and tariff hikes between the United States and China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies,” it said.

These and country- and sector-specific factors “further reduced momentum,” it said.

For the ASEAN-5, which comprises Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, the IMF forecast growth this year to be at 5.1 percent while it is seen at 5.2 percent next year, both of which were unchanged compared to the WEO issued last January.

For the Philippines alone, the IMF forecast the Philippines’ 2020 output, as measured by gross domestic product (GDP), to improve to 6.6 percent.

Consumer prices is seen to average at 3.8 percent this year and 3.3 percent next year, both of which are within the government’s 2 percent to 4 percent target band until 2022.

Current account (CA) is seen to be at -2.2 percent and -1.8 percent of GDP for this and next year from the actual -2.6 percent of GDP in 2018.

The country has been posting CA deficits, after years of being in surplus, due to higher importation given the increased demand in the domestic economy.

The IMF, in its Regional Economic Outlook (REO) released in October 2018, projected a 6.6-percent growth for the country this year, lower than the previous forecast of 6.7 percent announced after the Article IV Consultation in September last year.

The lower forecast was made due to the impact of external factors, such as the trade tensions between the US and China. (PNA)