IMF cuts Philippines growth outlook to 5.3% for this year
THE Philippine economy is on track to expand this year, but probably at a slower clip, as stubbornly high inflation may warrant a “higher-for-longer policy rate path,” the International Monetary Fund (IMF) said on Tuesday (Oct 3).
The Fund said it cut its growth forecast for the Philippines to 5.3 per cent from a July estimate of 6.2 per cent, following a slowdown in second quarter growth, while inflation is expected to stay elevated, hurting consumer demand.
For the year, the IMF expects Philippine inflation to average close to 6.0 per cent, before easing to close to 3.5 per cent in 2024, which would probably require the central bank to hold on to higher interest rates.
“Thus, a higher-for-longer policy rate path is warranted until inflation firmly falls within the target range, alongside a tightening bias to anchor inflation expectations,” the Fund said in a statement.
The central bank has kept interest rates steady at its last two meetings, but left the door open to further rate hikes to bring inflation back to its target of 2.0 per cent to 4.0 per cent for the year, after it quickened in August to 5.3 per cent.
For 2024, the Philippine economy is projected to expand 6.0 per cent, faster than its previous estimate of 5.5 per cent, the Fund added.
The IMF’s revised projections were lower than the government’s targets of 6.0 per cent to 7.0 per cent this year and 6.5 per cent to 8.0 per cent next year. REUTERS
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