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IMF maintains a 6% growth forecast for PH following good Q1 output

The Philippine economy is expected to increase by 6 percent this year, according to the International Monetary Fund (IMF). Despite the effects of high inflation, high-interest rates, and difficult external developments, the Philippine economy is expected to perform well in 2024.

The mission head of the IMF team, Shanaka Jay Peiris, said in a briefing on Friday that the country’s economy had experienced one of the best pandemic recoveries, with GDP growth of 7.6 percent in 2022, exceeding the government’s aim of 6.5-7.5 percent.

The domestic economy outperformed forecasts in the first quarter of this year, growing by 6.4 percent.

However, the growth rate from January to March this year was lower than last, which was 8 percent. The authorities attributed this, among other things, to base effects and the influence of the high inflation rate.

According to Peiris, the economy’s growth in the first quarter of this year was by forecasts. Therefore, the full-year prediction for 2023 remained the same.

He also mentioned that the inflation rate has slowed but added that they anticipate the Bangko Sentral ng Pilipinas (BSP) to maintain high-interest rates for most of this year.

After reaching its greatest point for the year so far of 8.7 percent last January, a 14-year high, the rate of price increases decreased to 6.6 percent last April.

The Monetary Board (MB), which sets policy at the central bank, has raised the BSP’s main rates by 425 basis points since May 2022 in response to the acceleration of inflation.

“Given that inflation, core inflation is still high and global inflation remain high,” he said, “the current policy stance might be kept tighter for longer, maybe most of this year.”

Peiris stated that while they anticipate the strong output of the domestic economy to continue in the coming year, base effects and other factors would make this difficult.

When asked about potential countermeasures, he suggested emphasizing the investment side, such as enhancing infrastructure and boosting productivity through digitization and agricultural reforms.

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