THE International Monetary Fund (IMF) cut its growth forecast for the Philippines this year to below the government’s lower target.
In the latest issue of the World Economic Outlook (WEO), the IMF said it now forecasts the Philippines to grow by 3.2 percent for 2021—down from the 5.4-percent forecast of the country’s gross domestic product (GDP) growth in July.
The latest IMF growth forecast is lower than the government’s 4- to 5-percent target growth range for the year. It is also lower than the forecasts of other multinational monetary authorities.
In September this year, the Asian Development Bank (ADB) said its forecast for the Philippine economy is to grow by 4.5 percent for this year. In June, meanwhile, the World Bank said it sees the country growing by 4.7 percent.
For next year, the IMF projects the country to bounce back to a growth of 6.3 percent. For 2026, the IMF said the Philippines will likely sustain its growth at 6.5 percent.
Asean-5, too
The global monetary authority has also slashed its growth forecast for the Association of Southeast Asian Nations (Asean)-5 for the year, with one of the steepest revisions per region seen in the October WEO.
The IMF slashed the Asean-5’s growth forecast to 2.9 percent for this year from the 4.3-percent projection they made in July. The Asean-5 regional bloc is composed of the Philippines, Indonesia, Malaysia, Thailand and Vietnam.
For next year, the IMF sees the region growing by 5.8 percent, also down from the July projection of 6.3 percent.
The cuts in the Philippine and Asean growth forecast reflect the IMF’s lowered forecast for the world economy. From 6 percent in the July forecast, it has slightly lowered the world output projection to 5.9 percent.
“The global recovery continues but the momentum has weakened, hobbled by the pandemic. Fueled by the highly transmissible Delta variant, the recorded global Covid-19 death toll has risen to close to 5 million and health risks abound, holding back a full return to normalcy. Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased, and policy trade-offs have become more complex,” the IMF said.
The IMF also flagged the dangerous divergence in economic prospects across countries as a “major concern” for the world.
“These economic divergences are a consequence of large disparities in vaccine access and in policy support. While almost 60 percent of the population in advanced economies are fully vaccinated and some are now receiving booster shots, about 96 percent of the population in low-income countries remain unvaccinated,” the IMF said.
“Emerging and developing economies, faced with tighter financing conditions and a greater risk of de-anchoring inflation expectations, are withdrawing policy support more quickly despite larger shortfalls in output,” it added.