IMF lowers 2018 growth forecast for PHL to 6.5 percent

The International Monetary Fund (IMF) has downgraded its Philippine economic growth forecast for 2018 as a result of rising inflation and other external risks.

In its Article IV consultation staff report published on Friday, the IMF is projecting the country's gross domestic product (GDP) to grow at 6.5 percent in 2018.

This is a downgrade from an earlier estimate of 6.7 percent in its July report. 

However, IMF kept the growth outlook for 2019 at 6.7 percent citing "strong domestic demand."

"Risks to the growth outlook are tilted to the downside, stemming mainly from rising inflation and overheating, higher oil prices, high credit growth, intensification of global trade tension, and the impact of higher US interest rates and volatile capital flows on borrowing costs over the short term," the IMF said.

"On the upside, fiscal incentive for streamlining and liberalizing foreign investment, if approved and implemented, would boost productivity over the medium term and strengthen investor confidence," it said.

The Philippines has been reeling from high inflation environment with the inflation hitting 6.4 percent in August, the highest in nine years since March 2009.

“Nonetheless, the medium-term economic outlook remains favorable, placing the Philippines in a good position to tackle still-elevated poverty and inequality,” the IMF said.

The IMF's downgrade is similar to the move by the Asian Development Bank, which revised its growth outlook to 6.4 percent this year from an earlier estimate of 6.6 percent. 

The IMF and ADB's growth forecasts are way below the Duterte administration's target growth range of 7.0 to 8.0 percent from 2018 to 2022. —KG, GMA News