THE International Monetary Fund (IMF) may revise its growth forecast for the Philippines downward this year, after the local economy posted a lower-than-expected expansion in the first quarter.
In an e-mailed response to the BusinessMirror, IMF Resident Representative Shanaka Jayanth Peiris admitted that the 5.2-percent growth in the first quarter of the year is lower than their projections when they formulated their 6.7-percent growth forecast for 2015, as announced about a week ago.
“The first-quarter gross domestic product [GDP] out-turn was somewhat below the IMF forecast, due partly to temporary factors, such as weak agriculture production, exports and public spending,” Peiris said.
“…the significant negative surprise in the first quarter and base effects going forward mean that our 6.7 [percent] forecast for 2015 will be reviewed before the next WEO [world economic outlook] forecast release,” the IMF added.
Earlier this month, in the conclusion of their Article IV consultation mission in the Philippines, the IMF said that it sees growth coming in at 6.7 percent—but this forecast still does not take into account the actual GDP growth in January to March this year.
As such, IMF Head of Mission to the Philippines Chikahisa Sumi said in the Article IV concluding media briefing that the forecast may change depending on the actual numbers projected by the economy in the first quarter of the year.
Despite the downturn, Peiris said the IMF believes that the Philippines will recover from the early slump in the year and pick up the pace of the country’s growth momentum.
“We still expect growth to pick up through the year as
exports recover with the global economy and public spending accelerates with the measures that are being put in place by the DBM [Department of Budget and Management] and the President’s administrative order,” the IMF resident representative said.
Singapore-based DBS Bank was among one of the earliest financial insitutions to downgrade their growth forecast on the Philippine economy due to the slow first-quarter growth in the year.
“We now expect GDP growth to come in at 6 percent and 6.2 percent in 2015 and 2016, respectively—slight adjustments from our previous forecasts of 6.3 percent and 6 percent,” DBS Bank economist Gundy Cahyadi said.
“It is always a long stretch to meet the government’s 7-percent target for 2015, but GDP growth circa 6 percent still puts the Philippines as one of the fastest-growing economies in the region,” Cahyadi added.