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IMF upgrades RP growth forecast |
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The Manila Bulletin 04/14/2005
The International Monetary Fund (IMF) said they expect the economy to grow a modest 4.7 percent of gross domestic product this year, due to the unabated inflationary threats of higher fuel, transportation and food prices. In its World Economic Outlook report released yesterday, the IMF however upgraded the Philippine’s gross domestic product (GDP) growth projection from an earlier forecast of 4.2 percent to 4.7 percent in 2005 and 4.5 percent next year. Inflation outlook in the meantime is expected to hit the high end of 6.8 percent this year from 5.5 percent in 2004. Current account balance on the other hand is seen to decline from 4.6 percent of GDP in 2004 to 2.6 percent this year. The Philippines, the IMF report said, is still "relatively exposed to higher US interest rates." One source of a downside risk is the ongoing depreciation of the US dollar, which could weaker global growth. Also in the World Economic Outlook is the IMF forecast growth for emerging Asian nations, which they expect will slow down to seven percent growth to GDP from 7.8 percent in 2004. "The strong result (in 2004) owed much of its buoyancy of activity in late 2003 and early 2004 (since that time with the exception of China) GDP growth in most countries has slowed noticeably." This reflected the moderation of the global expansion and higher oil prices. Based on the latest IMF surveillance report despite that the Philippine economic reforms have "proceeded haltingly over the last few years" — it is encouraged by efforts of government to formulate a comprehensive economic package including tax measures and raising power tariffs. However financial markets and investors were still on the look out for "early evidence of implementation." Still, the report continues, "critical economic reform bills had repeatedly been delayed by political resistance perhaps reflecting a lack of sense of urgency about the country’s economic problems." The Philippines will continue to be under the scrutiny of the IMF in the guise of global monetary cooperation and to advance financial stability. The IMF, in conducting its Post-Program Monitoring effort implied that the government had failed to make significant progress in adopting reforms to encourage confidence. Under the PPM framework, the government must accept a semi-annual visit from an IMF team, which will monitor fiscal and monetary performance, among others. Of particular interest to the IMF is the country’s burgeoning public debt, which continues to grow every year because of the government’s inability to straighten out tax administration. The Philippines has been under the tutelage of the IMF since it first took out loans to augment the country’s dollar stock in 1976. With almost $1.4 billion outstanding loans to the IMF, the body is still influential in shaping state economic policies. |
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