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Manila Bulletin devider Business devider Banking & Finance devider IMF cuts PH 2024 growth forecast to 6%

IMF cuts PH 2024 growth forecast to 6%

Published Jun 10, 2024 12:31 pm

The International Monetary Fund (IMF) has downgraded its economic growth forecast for the Philippines from 6.2 percent to six percent for 2024 due to the lower first quarter output growth.

 

The latest gross domestic product (GDP) forecast is lower than the IMF’s previous 6.2 percent estimate announced in April in a World Economic Outlook (WEO) report.

 

For 2025, the IMF still has a 6.2 percent GDP growth projection, the same forecast last April.

 

In a press briefing on Monday, June 10, IMF Mission Head Elif Arbatli Saxegaard said the local economy is on a strong growth path despite “external challenges and policy tightening.”

 

However with a lower-than-expected GDP growth of 5.5 percent in 2023 and below-target of 5.9 percent in the first quarter, growth “is expected to rebound to 6.0 percent in 2024 and 6.2 percent in 2025, on the back of stronger consumption demand, higher public and private investment, and a recovery in exports.”

 

“Downside risks to the outlook stem from geoeconomic fragmentation, high interest rates, and climate-related shocks, while efforts to attract foreign direct investment, promote business-friendly reforms, and enhance competitiveness could raise the economy's long-term growth potential,” said Saxegaard who is in town as part of the 2024 Article IV Consultation of the IMF.

 

Meanwhile, the IMF said the Bangko Sentral ng Pilipinas (BSP) has adequately addressed inflationary pressures by keeping the key interest rate appropriate at 6.5 percent which resulted after a cumulative 450 basis points increase since May 2022.

 

Saxegaard said inflation is expected to moderate to three percent in the second half of 2024 with persistent upside risks to inflation from geopolitical tensions and commodity price volatility.

 

“In this context, the recent reduction in tariffs on rice imports from 35 to 15 percent in the second half of the year, along with the decision to streamline administrative procedures and remove non-tariff barriers in the importation of agricultural products can play an important role in mitigating food price increases and their impact on vulnerable households,” she said.

 

The IMF official also agreed with BSP in maintaining a restrictive policy stance “to firmly anchor inflation expectations.”

 

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