IMF cites weak exports, ongoing budget saga for downgraded GDP view

WEAKER EXPORTS and the delayed passage of the 2019 Budget triggered the downgrade to the International Monetary Fund’s (IMF) forecast for the economy, an IMF official said.

“The downward revision mainly reflects weaker-than-expected external demand and lower than expected public investment partly reflecting the delay in the approval of the 2019 budget,” Yongzheng Yang, IMF Resident Representative to the Philippines, said in an e-mail.

The Philippine Statistics Authority (PSA) said on Thursday that the merchandise exports fell 0.9% year-on-year to $5.18 billion in February.

Goods imports, meanwhile, rose 2.6% to $7.97 billion in February.

The IMF forecast the economy to grow 6.5% this year from its previous estimate of 6.6% issued in 2018. The new estimate, however, is higher than the downwardly-revised 6.4% forecasts issued by the World Bank and Asian Development Bank last week. It remains within the government’s forecast range of 6-7%.

The IMF noted that the Philippines will remain a growth leader in Asia, together with Vietnam. Expected growth for the ASEAN-5 sub-region, which includes Indonesia, Malaysia, and Thailand, meanwhile, remains at 5.1% this year and 5.2% for 2020.

Last month, Finance Secretary Carlos G. Dominguez III said that even if both Houses of Congress resolve the impasse over the P3.757 trillion budget for 2019, it may be too late to start up key projects due to the election spending ban and the rainy season, which dampens construction activity.

Mr. Dominguez said the Budget saga had caused the government to fail to spend P500 million each day since the start of the year, as a result of which the 7% GDP growth eyed for this year has become less attainable.

“It becomes less attainable. It is like a balloon. You put a little weight in it, it cannot fly as high,” Mr. Dominguez said.

“Time is lost. What is lost is lost. No matter how much you want to catch up, you can never really catch up especially that the weather has been so good for the past almost three or four months,” according to Mr. Dominguez. — Reicelene Joy N. Ignacio with Melissa Luz T. Lopez