PHL economy “gradually recovering”: IMF

(Eagle News) — The International Monetary Fund on Wednesday, June 16, said the Philippine economy was “gradually recovering” following the pandemic-induced economic downturn in 2020.

In a statement, the IMF said real Gross Domestic Product was projected to grow by 5.4 percent this year.

While slower than the IMF’s earlier forecast of 6.9 percent in April, the IMF said the policy support in the country was working and “mitigated the hardship suffered by affected families and businesses and helped safeguard macro-financial stability.”

It said real GDP was projected to expand by  7.0 percent in 2022, “due to continued easing of quarantine measures, progress in vaccinations, and macroeconomic policy support.”

Nevertheless, the IMF said “uncertainty around the pace of the economic recovery is high, and the balance of risks to economic activity is tilted toward the downside.”

Supply constraints, it said, could lead to “delays in vaccinations, which in turn would increase the risk of virus resurgence after the recent second wave and tightening quarantine measures. ”

“Also, it could amplify the effect of external shocks, such as rising global interest rates and inflation, that would constrain the monetary policy response and raise financing costs for the public and private sector,” the body said.

The IMF said “a reinvigorated infrastructure push with greater private sector participation and a stronger global recovery could help accelerate growth.”

For the recovery to be maintained, it said “monetary policy should remain accommodative.”

“While the recent spikes in inflation should be closely monitored, the present monetary policy setting is appropriate as the current inflation pressure appears to be temporary and is likely to taper off in the second half of the year,” it said.

It added “timely” implementation of fiscal support, maintaining financial stability and reviving credit growth will be critical to continued recovery.

To boost investment and revert to its strong pre‑pandemic growth rates, the IMF said the Philippines needs to maintain the momentum of structural reforms.

“These reforms will help the Philippines build back better and position the country for a more equitable and greener future,” the IMF said.