IMF adjusts PH growth forecasts
The International Monetary Fund (IMF) has revised its 2023 and 2024 Philippine growth forecasts, raising the outlook for this year given strong first-quarter results but trimming that for next year due to global headwinds and higher interest rates.
"Demand and growth dynamics have remained strong in 2023. So we've adjusted upwards our projection for 2023," IMF Resident Representative for the Philippines Ragnar Gudmundsson said ahead of the release of the Washington-based lender's updated World Economic Outlook.
Philippine gross domestic product (GDP) growth is now expected to average 6.2 percent instead of 6.0 percent this year, which Gudmundson said was prompted by a better-than-expected January-March outturn.
The economy grew by 6.4 percent in the first three months of the year, slowing from 7.1 percent at the end of 2022 but beating analysts' expectations of a 6.1-percent result following aggressive monetary tightening to combat inflation.
The IMF's revised outlook — a slowdown from 2022's above-target 7.6 percent — falls within the government's 2023 goal of 6.0- to 7.0-percent growth.
For next year, however, the multilateral organization sees Philippine growth slowing to 5.5 percent instead of 5.8 percent, which Gudmundson said was "because of global headwinds and the lagged effects of monetary policy tightening."
"The impact of the tightening and the possible slowdown in growth in advanced economies could affect the Philippine economy next year, a little bit more, and this is why we think that growth may come down slightly in 2024," he added.
The government is targeting GDP growth of 6.5 to 8.0 percent for next year up to 2028.
Domestic inflation, meanwhile, is now expected by the IMF to average 5.6 percent this year, down from 6.3 percent previously but still well above the Bangko Sentral ng Pilipinas' 2.0- to 4.0-percent target.
Gudmundsson said that consumer price growth would return to the target range next year at 3.2 percent.
Inflation hit a 14-year high of 8.7 percent in January but has fallen for the last five months. This prompted monetary authorities to pause from hiking interest rates for the last two policy meetings.
The rate eased to 5.4 percent in June and results for July will be released next week. The Bangko Sentral expects monthly inflation to fall below 4.0 percent by the fourth quarter but still average above target at 5.4 percent.
The official average inflation forecast for 2024 is 2.9 percent while that for 2025 is 3.2 percent.