MANILA: The International Monetary Fund (IMF) expects the Philippine economy to grow faster than the regional average, citing reforms that could unlock stronger long-term expansion.
In an exclusive interview with the Philippine News Agency in Makati City, IMF Managing Director Kristalina Georgieva said the Philippines stands out within the Association of Southeast Asian Nations (Asean).
“Overall, Asean has been a bright spot on the economic horizon. Asean countries outperform the average global growth. Just to give you a sense, we project 3.3 per cent for this year, Asean is 4.3 per cent, and Philippines within Asean outperforms the average,” she said.
In its latest World Economic Outlook, the IMF projected Philippine economic growth at 5.6 per cent this year and 5.8 per cent in 2027.
“For the past years, the Philippine economy has been growing just slightly under 6 per cent on average. Last year there has been a bit of a slowdown. We hope that that this year, with reforms, the Philippines can catch up,” Georgieva said.
She warned, however, that tensions in the Middle East could affect the global economy.
“Developments in the Middle East are yet again testing the resilience of the world economy. We have seen over the last years, shock upon shock upon shock. We have to recognise that we live in a more shock-prone world that is changing very rapidly. This last one, we are not yet sure how fast it would end and what the impact could be,” she said.
“From past experience, with this kind of energy price shocks, when energy prices go up, inflation expectations go up, financial conditions tighten and we are already seeing some of this happening across the world,” she added.
Georgieva noted that the Philippines’ heavy reliance on imported oil highlights the need to accelerate renewable energy investments to sustain a positive PH economic growth.
“Reduce reliance on imported oil by increasing rapidly what you have. Solar, renewable energy,” she said, while crediting government efforts to ease regulations for solar projects.
“That’s a very good thing,” she said.
“But I think the ambition has to be, to do more. Make it so that renewables can connect to the grid, focus on the capacity of the grid to absorb it faster, make sure that there will be more investments in solar,” she added.
Georgieva also urged the Philippines and other Asean economies to remove investment barriers, improve governance, invest in human capital, and harness digitalisation.
“What is the best asset of the Philippines? The Filipinos. Make sure that the educational system is strong, recognise that artificial intelligence is already here so how do you prepare the labor force for the world of AI,” she said.
Georgieva also stressed the need to strengthen resilience against climate shocks.
“Over the last decades, the Philippines has done well to build a strong foundation, good institutions, and good policies. You have an independent central bank that has inflation-targeting, you have fiscal authority that is careful about raising revenues and using public money wisely. This is a pre-requisite. Continue to pay attention to them,” she said.
“Second, identify where other countries are doing better in productivity growth and then tackle what you still need to overcome,” she added. - PNA
