By Melissa Luz T. Lopez
INVESTOR SENTIMENT remains favorable for the Philippines despite increased political noise, an official of the International Monetary Fund (IMF) said, noting that general optimism should buoy growth prospects.
“Our sense is that investor confidence remains strong, as the growth outlook for the Philippines is favorable both in the short and medium term (in line with potential growth we have recently updated),” Yang Yongzheng, IMF’s new country representative in Manila, said in a recent e-mail interview.
Mr. Yang said business confidence will remain intact amid heightened political issues in the local scene. The second year under President Rodrigo R. Duterte has been marked by conflict with militants in Marawi City that has dragged for nearly five months, a string of impeachment complaints against heads of Constitutional bodies and the Judiciary, and mounting criticism of the bloody war on drugs, to name a few.
Still, the IMF official said prospects are bright for the Philippines.
“This outlook is supported by strong macroeconomic fundamentals and policy buffers, including a low level of public debt and high level of foreign reserves. Ongoing efforts on tax reforms will also support growth over the medium term,” Mr. Yang said.
The multilateral lender forecasts a 6.6% growth for Philippine gross domestic product (GDP) this year under its World Economic Outlook published last week, which will allow the country to remain a growth leader in Southeast Asia. This renders the government’s 6.5-7.5% goal doable.
Business confidence slipped to a three-year low last quarter, results of the central bank’s Business Expectations Survey showed, as local companies were spooked by the Marawi conflict, a weaker peso and a seasonal slack in demand. It was only yesterday that Mr. Duterte declared the southern city “liberated from the terrorists.”
Philippine GDP grew by 6.4% last semester, a notch below the low end of the official growth goal.
Economic managers see growth picking up this semester on the back of sustained strength in consumption and investments, particularly driven by a surge in spending due to the rollout of big-ticket infrastructure projects and as the Christmas season draws near.
The IMF expects a 6.7% expansion in 2018, which is below the state’s 7-8% goal.
Central bank officials have said that the country’s sound fiscal and monetary policies make it an attractive investment destination for foreign investors, who are looking for opportunities amid slow recovery in global growth.
Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo has said the country’s healthy external position and hefty dollar reserves provide “comfort” for international investors, as these factors provide resilience to external risks which could otherwise weigh on the local economy.