AFTER lowering its global growth outlook for 2015 and 2016, the International Monetary Fund (IMF) conversely raised growth projections for the Philippine economy.
“The growth forecasts for 2015 and 2016 have been raised to 6.6 percent and 6.4 percent, respectively, reflecting the boost from lower global oil prices and anticipated pick up in government spending from the low base in 2014,” IMF Resident Representative Shanaka Jayanath Peiris said.
The Washington-based global lender earlier projected Philippine economic growth at 6.3 percent for 2015 and 6.2 percent for 2016.
The outlook, however, remains lower than the government’s slated target of 7-8 percent in the coming years.
Last year, the IMF downgraded its forecast to 5.8 percent in 2014 from the 6.2 percent GDP growth in its early estimate.
Peris noted that the downgrade for the previous year “reflects the outcome for the first three quarters related to lower agricultural output and government spending.”
For the first three quarters of 2014, the Philippine economy grew by 5.8 percent, a letdown from the government’s 6.5 to 7.5 percent target.
The government will be releasing the official fourth quarter and 2014 gross domestic product data on Jan. 29.
Around the world, not every country is experiencing the healthy growth in its economy.
Contrary to the Philippines’ hiked projection for 2015 and 2016, global growth is forecasted at 3.5 percent for 2015 and 3.7 percent for 2016, the IMF noted in its World Economic Outlook report. The figures are evidently 0.3 percent lower compared to earlier estimation.
“New factors supporting growth, lower oil prices, but also depreciation of euro and yen, are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries,” IMF chief economist Olivier Blanchard explained.
The organization urged advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation.
Furthermore, IMF advised countries to pursue an accommodative policy “through other means,” in case policy rates could not be reduced further.
Among nations in the major economies, the United States was nonpareil with its projected growth raised to 3.6 percent from 3.1 percent for 2015.
For countries with emerging economies, on the other hand, an immense chop in the projections is seen, noting worse outlook for oil exporters Russia, Nigeria, and Saudi Arabia.
“We expect the decrease in price [of oil] to be quite persistent,” Blanchard said. “We expect some return, some increase, but surely not an increase back to levels where we were, say, six months ago.”
In more than two decades, China received a projected growth of lower than seven percent. IMF said China will expand at 6.8 percent this year—0.3 percent slower than previously expected—and 6.3 percent in 2016.
The sluggard growth in the economy of China, the IMF said, will spill over especially to other Asian countries, resulting in its downgrade of their growth prospects as well.
It “reflects the welcome decision by the authorities to take care some of the imbalances which are in place and the desire to reorient the economy towards consumption and away from the real estate sector and shadow banking,” Blanchard reiterated.
IMF is home to 188 countries working together to foster global monetary cooperation.
(With reports from Reuters)
(New York & New Jersey January 23-29, 2015 Sec. A pg.1)