by: Sarah Joson
Tuesday, April 07, 2015 | Outsourcing News |
The Philippine economy is predicted to post a 6.7 percent growth this year, according to the International Monetary Fund (IMF). However, even if the growth prediction is marginally higher than the previous estimate of 6.6 percent, it is still lower than the growth target eyed by the local government.
IMF released a statement after its recent event “Mission to the Philippines”, saying the slight increase in the 2015 growth outlook is caused by strong private construction, export expansion, low commodity prices, and increase in public spending. In addition to that, IMF expects inflation to stay at the lower end of the Bangko Sentral ng Pilipinas’ (BSP) target range (2-4 percent), due to lower commodity prices. Also, the nation’s account surplus is seen to strengthen since the price of oil is lower, and earnings from the business process outsourcing (BPO) sector, tourism, and remittances remain strong.
However, IMF noted that risks to inflation outlook will be caused by external and domestic pressures. For instance, disruptive asset price shifts in financial markets due to varying monetary policies in developed nations are considered threats, but the strong fundamentals of the Philippines provide adequate buffer to the impact. Moreover, external demand could be weaker should key emerging markets face deflation threats and lower potential growth.
The IMF also pointed out that the BSP’s efforts of reducing risks to financial stability, which include the real estate exposure of banks, have been successful and in fact contained liquidity and credit growth.
As for the Philippine government, growth projections are set at 7-8 percent this year, from 6.1 percent in 2014.
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