Thursday, 7 October 2010

IMF raises RP’s growth forecast for the 2nd time

by Roderick T. dela Cruz
Manila Standard

THE International Monetary Fund has upgraded its 2010 growth forecast for the Philippines for the second time this year, and to 7.0 percent from its previous estimates of 6.0 percent and 3.6 percent, as the Southeast Asian economy rides the crest of a regional growth wave.

“The four major Association of Southeast Asian economies [including the Philippines] have benefited from the strong regional upswing, particularly those exporting commodities and electronics,” the IMF said in its latest World Economic Outlook released Wednesday.

“Overall, near-term growth for the region is projected to be underpinned both by exports and domestic demand.”

The Fund’s 2010 growth forecast for the Philippines is higher than the 6.2-percent growth estimate of the Asian Development Bank, Economist Intelligence Unit and DBS Group, but a tad lower than the 8-percent projection made by British Investment bank Barclays Capital.

The World Bank has yet to announce its latest growth outlook for the Philippines after making a 4.4-percent growth forecast in June.

Economic growth in the Philippines accelerated to 7.9 percent in the first half of 2010, but the government has stood by its 5- to 6-percent growth target for the whole year.

The IMF also revised its growth forecast for the Philippines to 4.5 percent from 4.0 percent for 2011.

The Fund sees Asia growing 7.9 percent in 2010 following a 3.6-percent growth in 2009. China is expected to expand by 10.5 percent this year, India by 9.7 percent, Japan by 2.8 percent, Australia by 3.0 percent, Korea by 6.1 percent, Taiwan by 9.3 percent, Hong Kong by 6.0 percent, Singapore by 15.0 percent, Indonesia by 6.0 percent, Thailand by 7.5 percent, Malaysia by 6.7 percent, and Vietnam by 6.5 percent.

The Fund sees inflation in the Philippines picking up to 4.5 percent in 2010 from 3.2 percent last year, and to 4.0 percent next year.

The current account surplus is expected to amount to 4.1 percent of the gross domestic product in 2010 and 3.4 percent of GDP in 2011, and against 5.3 percent of GDP in 2009.

The Fund sees unemployment in the Philippines easing to 7.2 percent of the labor force in 2010 and 2011 from 7.5 percent in 2009.

The IMF said the global economic recovery was proceeding broadly as expected, but the downside risks remained high.

“Most advanced economies and a few emerging economies still face large adjustments. Their recoveries are proceeding at a sluggish pace, and high unemployment poses major social challenges,” the IMF said.

The Fund said the global economy expanded by 5.25 percent in the first half as the surge in inventory and fixed investment accounted for a dramatic rise in manufacturing and global trade.

But it said the global recovery remained fragile because strong policies to foster internal re-balancing of demand from public to private sources and external re-balancing from deficit to surplus economies were not yet in place.

“Global activity is forecast to expand by 4.8 percent in 2010 and 4.2 percent in 2011, broadly in line with earlier expectations, and downside risks continue to predominate,” the Fund said.

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