OFFICIALS of the International Monetary Fund (IMF) are in town for an annual health check on the Philippine economy, at a time the multilateral lender sees uneven prospects for global growth amid trade tensions.
A team of IMF economists flew in from Washington last week for their Article IV mission.
IMF country representative Yongzheng Yang confirmed the “yearly” visit of IMF officials.
This is part of the multilateral lender’s regular surveillance work among member-economies, as required under Article IV of the IMF articles of agreement.
Representatives monitor economic and financial developments and discuss fiscal and monetary responses with government and central bank officials in countries they visit.
The IMF has published its World Economic Outlook update, where it kept a 3.9% growth forecast for global output this year and in 2019. While the projection is unchanged from the April report, the IMF pointed out that overall growth “is becoming less even” and that risks to the outlook are “mounting.”
Gross domestic product (GDP) growth in the United States is seen strengthening to 2.9% from 2.3% in 2017. In contrast, growth prospects are dimming for Japan, the United Kingdom and the euro area.
“The balance of risks has shifted further to the downside, including in the short term. The recently announced and anticipated tariff increases by the United States and retaliatory measures by trading partners have increased the likelihood of escalating and sustained trade actions,” read the report published on Monday.
“Avoiding protectionist measures and finding a cooperative solution that promotes continued growth in goods and services trade remain essential to preserve the global expansion. Policies and reforms should aim at sustaining activity, raising medium-term growth, and enhancing its inclusiveness.”
The US imposed an additional 10% tariff on $200 billion worth of Chinese products last week, escalating its trade war with the world’s second-biggest economy. Beijing will retaliate, Chinese Vice-Minister of Commerce Wang Shouwen had said before the World Trade Organization.
The IMF also flagged interest rate increases in major economies as a source of concern, saying: “Tighter financial conditions could potentially cause disruptive portfolio adjustments, sharp exchange rate movements and further reductions in capital inflows to emerging markets, particularly those with weaker fundamentals or higher political risks.”
In contrast, the IMF sees growth among Southeast Asian economies will remain robust as it kept a 5.3% estimate for the ASEAN-5 composed of the Philippines, Indonesia, Malaysia, Thailand and Vietnam.
Growth will be sustained by “healthy” domestic demand and a recovery in exports, the lender said.
Prior to the IMF’s ongoing review, the multilateral lender saw Philippine gross domestic product growing by another 6.7% this year, replicating 2017’s pace.
This compares to the 6.8% growth estimate given by the Asian Development Bank and 6.7% of the World Bank, but short of the 7-8% annual growth goal set by the Duterte administration. — Melissa Luz T. Lopez