Upbeat
No. 23.04.14 No. 2108 10.30.2008
IMF, S&P raise PHL's 2014 growth forecast The International Monetary Fund (IMF) raised the Philippines' growth forecast this 2014, sustained by higher demand due to reconstruction-related efforts in Typhoon Yolanda-hit areas. The IMF representatives also put forward a set of reforms, ranging from the rationalization of tax perks to a more open policy for the entry of foreign investors, which would allow the country’s economy to perform at its “full potential.”
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“While the envisaged growth path is faster than what was achieved during the previous decades, realizing the Philippines’ full potential for rapid, sustained, and inclusive growth calls for further reducing bottlenecks to investment and formal sector employment,” the IMF said. The Philippines is seen growing by 6.5% this year, better than the previous projection of 6.3% forecast, which was issued on January 22.
In a separate report, Standard & Poor’s (S&P) also raised the Philippines’ 2014 growth projection to 6.6%. “Growth in the Tiger economies will likely pick up this year, in step with global trade improvements driven by the U.S. and Europe,” S&P said. Meanwhile, IMF Philippines Mission Chief Rachel Van Elkan said the effects of the U.S. Federal Reserve’s tighter policy settings, which are expected to lead to higher interest rates globally, were already incorporated in the forecast for the country. “The Philippines is well-positioned to absorb a gradual tightening of U.S. financial conditions to implement timely, measured action on the domestic policy front,” Van Elkan said. With the country’s 6.25% estimated potential growth, it is expected that the positive output gap will slightly widen this year due to the fiscal stimulus from Yolanda-related reconstruction activities further supports growth, she added. The IMF would continuously support reforms that would sustain the Philippine economy’s strength. Among these were the rationalization of fiscal incentives, which would help the government expand its tax base. “Mobilizing the additional revenue needed to meet the goal of achieving 5% of GDP infrastructure spending by 2016, while remaining within the 2% of GDP ceiling, should rely primarily on tax base broadening,” Van Elkan said.