IMF ups Philippine growth outlook for 2023 to 6%, but down 5.8% in 2024

WASHINGTON/MAKATI CITY — The International Monetary Fund (IMF) sees the Philippines growing fastest in emerging and developing Asia this year.

IMF, at the same time, upgraded its economic outlook for the country to 6% despite a projected slump in the global economy.

Its April World Economic Outlook report showed the multilateral lender’s upward revision for the local economy from the initial 5% forecast earlier this year.

The projected growth for the Philippines is faster than China (5.2%), India (5.9%), Indonesia (5%), Thailand (3.4%), Vietnam (5.8%), and Malaysia (4.5%), the report stated.

This, however, would be slower than the 7.6% GDP expansion in 2022 but matched the lower end of the government’s 6-7% target for this year.

For 2024, the Philippine economy may expand even weaker by 5.8%, IMF said.

Based on the report, the IMF said the global economy is facing “a rocky recovery” amid recent developments in the banking sector pulling down investors’ confidence.

This is coupled with “major forces” in 2022 that might continue this year, including soaring inflation, aggressive interest hikes, high debt levels and persistent shocks from the COVID-19 pandemic and ongoing Russia-Ukraine war.

“[T]hese forces are now overlaid by and interacting with new financial stability concerns. A hard landing— particularly for advanced economies has become a much larger risk. Policymakers may face difficult trade-offs to bring sticky inflation down and maintain growth while also preserving financial stability,” it said.

“With the recent increase in financial market volatility and multiple indicators pointing in different directions, the fog around the world economic outlook has thickened,” the IMF added.

According to IMF’s projections, the global economy may grow 2.8% this year, weaker than last year’s 3.4% rate. For 2024, the global economy is seen to recover to 3%.

In the WEO report, the IMF said high uncertainty continues to cloud the global economic outlook this year, citing downside risks from central banks’ tight monetary stance, high debt levels, limited fiscal buffers, commodity price spikes and geopolitical tensions.

“But these forces are now overlaid by and interacting with new financial stability concerns. A hard landing — particularly for advanced economies — has become a much larger risk. Policymakers may face difficult trade-offs to bring sticky inflation down and maintain growth while also preserving financial stability,” the IMF said.

The IMF trimmed its global growth forecast for 2023 to 2.8% (from the 2.9% given in January) and for 2024 to 3% (from 3.1%). If realized, this will be slower than the 3.4% global expansion in 2022.

In a “plausible alternative scenario” with further financial sector stress, the IMF said global growth may decline to around 2.5% in 2023.

Pierre-Olivier Gourinchas, economic counsellor and the director of research of the IMF, said in a statement that inflation is stickier than expected, even from a few months ago.  (with Claire Morales True/cmtpr1962@yahoo.com.ph)