Inquirer News Service
THE Philippines next year will continue to lag behind its Southeast Asian neighbors in terms of economic performance, the International Monetary Fund said in a report released Wednesday.
Hounded by huge public debts and political uncertainties, the Philippines is expected to post the slowest growth of 4.8 percent in gross domestic product and the highest inflation rate of 7.5 percent among four mid-level peer economies on the Association of Southeast Asian Countries (ASEAN-4) in 2006, the IMF said in its latest report on economic prospects.
Grouped as ASEAN-4 are the Philippines, Indonesia, Thailand and Malaysia. "Looking forward, the key macroeconomic priorities remain continued fiscal consolidation -- particularly in the Philippines, where large external financing requirements and high public debt remain significant vulnerabilities," the IMF said.
The government has a newly revised target of 5.7-6.3 percent for 2006.
The IMF report puts the projected 2006 average growth of ASEAN-4 economies at 5.4 percent, and that of other emerging economies on the regional bloc at 6.9 percent.
It forecasts Indonesia's growth at 5.8 percent, Thailand's at 5.0 percent and Malaysia's at 6.0 percent.
The IMF forecasts Philippine inflation in 2006 at 7.5 percent, compared with the ASEAN-4 average of 5.1 percent: Indonesia with 6.5 percent, Thailand with 2.7 percent, and Malaysia with 2.5 percent.
For this year, the IMF forecasts Philippine GDP growth at 4.7 percent, compared with Thailand's 3.5 percent, Indonesia's 5.8 percent and Malaysia's 5.5 percent.
It expects inflation this year to average 8.2 percent in the Philippines, 8.2 percent in Indonesia, 4.2 percent in Thailand and 3.0 percent in Malaysia.
Overall, the IMF said persistently high oil prices would adversely affect the region's economies.
"In the Philippines, where, after several months of improving fundamentals, the recent political turmoil has raised concerns about the prospects for economic reforms and led to downward revisions to the ratings outlook," it said, citing country-specific risks.
The IMF added that the very low level of private investment was the greater concern, underscoring a need to complete the unfinished reform agenda in financial and corporate sector restructuring, including improvements in governance.
The IMF expects the Philippines to perform well, second only to Malaysia, in terms of surpluses in the current account.
It forecasts the Philippine current account surplus at 2.1 percent of GDP this year and 1.9 percent next year, as against a deficit in Indonesia at 0.4 percent of GDP this year and a surplus of 0.7 percent of GDP next year. Doris Dumlao, with INQ7.net