IMF raises Philippine growth estimate to 6.3%, sees inflation picking up

MANILA: The Philippine economy is expected to grow 6.3 percent this year, better than previously thought, benefiting from faster growth in advanced economies and reconstruction after a massive typhoon last year, the International Monetary Fund said.
The Fund predicted in September the Philippines would grow 6 percent this year, after an expected expansion of 6.75 percent in 2013.
“The forecast is based partly on slightly better advanced economy outlook, which would mean that the external sector in the Philippines could have a boost,” Shanaka Jayanath Peiris, IMF resident representative in the Philippines, said.
Peiris added the reconstruction work at communities affected by a super typhoon in November would also have a “fairly positive effect” on the economy because that meant higher government spending.
Typhoon Haiyan, which slammed into the central Philippines and cut a swathe of destruction and killed at least 6,201 people, is seen to have limited impact on growth this year, but it will likely push up inflation.
A successful reconstruction effort, costing 361 billion pesos ($8 billion) over four years, could help keep the economy growing by 6.5-7.0 percent in the medium term, Peiris said.
The IMF estimates growth of 6.6 percent for the Southeast Asian country in 2015.
Inflation is seen picking up to 4.4 percent this year, faster than an earlier forecast of 3.5 percent, before slowing to 3.8 percent next year, Peiris said, adding the peso’s weakness will likely exert upward pressure on consumer prices this year.
The peso is hovering at more than three-year lows due to uncertainties over the speed and duration of the US Federal Reserve’s tapering program.
But with the country expected to enjoy a current account surplus of around 2.5 percent of GDP this year, the Philippines was well positioned to deal with any capital outflows when the Fed cuts its stimulus further, Peiris said.