Regional News
PHILIPPINE GROWTH FORECASTS have been cut by another multilateral institution, with the International Monetary Fund (IMF) pointing to a weaker-than-expected domestic results and heightened global concerns.
Regional and global projections were also revised in the latest World Economic Outlook (WEO) — released ahead of this weekend’s annual IMF and World Bank meetings — that cited continued economic and financial stability risks.
The Philippines, the WEO states, will likely grow by just 4.7% and 4.9% in 2011 and 2012, down from forecasts of 5.0% for both years that were announced in April.
These compare to the government’s 7-8% growth target for this year and the next, and the downwardly revised 4.7% and 5.1% projections for the same period — from 5.0% and 5.3% — that were released last week by the Asian Development Bank (ADB).
“The revision is due to the weaker-than-expected second quarter 2011 growth outturn, the downward revision to first-quarter growth, and greater headwinds to global growth since the last WEO release,” IMF Resident Representative Dennis Botman told BusinessWorld yesterday in an e-mail.
Gross domestic product (GDP) growth decelerated to 3.4% in the second quarter following a revised 4.6% (from 4.9%) for January-March, bringing the first-half average to just 4%.
“The risks to the outlook are coming mainly from the uncertain external environment,” Mr. Botman added.
The IMF said global economic growth would slow to 4.0% for 2011 and 2012, down from the 4.3% and 4.5% announced in June.
The forecast for emerging Asia was trimmed to 6.2% and 6.6% for the two years, from 6.7% and 6.8%, while that for the ASEAN-5 region — which includes the Philippines — was set at 5.3% and 5.6%, respectively, 0.1% down for each from the June outlook.
Asia as a whole, said the IMF, has seen growth stay strong, “although it is moderating with emerging capacity constraints and weaker external demand.”
“Downdrafts from weaker activity in major advanced economies suggest a pause in the policy tightening cycle may be warranted for some economies, and underscore the importance of rebalancing growth toward domestic sources,” it added.
Indonesia, meanwhile, is expected to lead the ASEAN-5 region with 6.4% and 6.3% growth, followed by Vietnam (5.8% and 6.3%), and Malaysia (5.2% and 5.1%). Thailand will lag behind the Philippines with GDP expansion of just 3.5% and 4.8% for the two years.
The Philippines, said Mr. Botman, could still see a second-half improvement.
“In our forecast, we expect the second half of 2011 to show stronger growth compared to the first half as government investment catches up with budget targets and supply-chain disruptions following the twin disasters in Japan dissipate,” he said.
Higher and more inclusive GDP growth can be attained via sin tax restructuring and the rationalizing of fiscal incentives, Mr. Botman added.
Sought for comment, University of the Philippines economist Benjamin E. Diokno said the IMF’s revised 4.7% GDP growth outlook “is within my revised forecast of 4.2-4.7%… for 2011.”
“Keep in mind that 2011 is now down to its final quarter…There is nothing the government can do to speed up economic activity,” he said in a text message.
In the same WEO report, the IMF said inflation could average 4.5% and 4.1% this year and the next, respectively, down from the April forecast of 4.9% and 4.3%.
The actual average as of August was 4.3% based on 2000 prices. Earlier this month the central bank cut its inflation forecasts to 4.46% from 4.7% for 2011 and 3.4% from 3.74% for 2012.
Unemployment, meanwhile, was projected to hit 7.2% through next year. The jobless rate grew slightly to 7.1% in July from 7% a year earlier.
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By: NJCM
Source: Business World, Sept. 20, 2011
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