By Karl Angelo N. Vidal
THE INTERNATIONAL MONETARY FUND (IMF) has further slashed its economic growth forecast for the Philippines this year and the next due to weaker-than-expected external demand and state spending last semester.
In an e-mail on Wednesday, IMF Country Representative Yongzheng Yang said the IMF now sees the Philippine economy growing by six percent this year, slower than the 6.5% forecast published in its World Economic Outlook report in April as well as the 6.6% and 6.7% it had pencilled in October and September last year.
The multilateral lender also cut its 2020 growth projection to 6.3% from the 6.6% estimated previously.
The IMF’s latest projection compares to last year’s actual 6.2% and the government’s 6-7% target for this year.
“The downward revisions mainly reflect weaker-than-expected external demand and weaker-than-expected public investment, partly due to the delayed approval of the 2019 budget,” Mr. Yang told BusinessWorld.
State primary expenditures — minus interest payments — dropped 1.94% to P1.41 trillion last semester from P1.438 trillion a year ago due to a four-month delay in national budget enactment.
“Note that these revised forecasts are still among the highest in the region, and that growth will continue to be driven by strong domestic demand,” Mr. Yang added.
The World Economic Outlook Update released on Wednesday also showed the IMF cut economic growth projections for ASEAN-5 — grouping Indonesia, Malaysia, the Philippines, Thailand and Vietnam — to five percent this year and to 5.1% next year, down by 0.1 point each.
Global growth forecasts were also cut by 0.1 point this year and next to 3.2% and 3.5%, respectively.