The International Monetary Fund (IMF) on Wednesday raised its 2014 economic growth projection for the Philippines while cutting the regional outlook, saying Manila will get a boost from higher exports and the reconstruction of areas hit by Typhoon Yolanda.
In a briefing Wednesday, IMF resident representative to the Philippines Shanaka Jayanath Peiris said they see the economy growing by 6.3 percent in this year, a revision of the 6 percent projection last September.
The Fund also sees further expansion of 6.5 to 7 percent in 2015.
The upgrade for Philippine prospects was made parallel to a cut in the outlook for ASEAN-5 – which groups Southeast Asia’s five largest economies – to 5.1 percent from 5.4 percent, according to the revised IMF “World Economic Outlook (WEO).”
The 2015 estimate for ASEAN-5 – Indonesia, Malaysia, Philippines, Singapore and Thailand – was kept at 5.6 percent.
“The external sector in the Philippines will feel a boost on improving global economic outlook,” said Peiris.
In the WEO, the IMF predicted the global economy growing by 3.7 this year, or 10 basis points higher than its previous projections. It also expected the global economy hurtling further to 3.9 percent in 2015.
Improving global economic prospects will result in stronger external demand, which could stoke Philippine exports, said Peiris.
Reconstruction in areas hit by Typhoon Yolanda will help fuel growth this year, he added.
The Philippines intends to spend no less than P360.8 billion over a three-year reconstruction phase in areas devastated by Yolanda.
But the twin effects of supply disruptions caused by the killer typhoon and rising energy costs will stoke Philippine inflation this year to 4.4 percent from an earlier projection of 3.5 percent, IMF estimates showed.
“We have revised upwards partly due to temporary factors,” Peiris said, citing rising food costs on account of supply bottlenecks from Yolanda-related damage and higher energy prices.
Peiris said they see Philippine inflation settling at 3.8 percent in 2015.
Bangko Sentral ng Pilipinas has an inflation target of 3 to 5 percent inflation this year 2014 and 2 to 4 percent for 2015.
“Inflation outlook looks fairly okay,” Peiris said. – VS, GMA News