The International Monetary Fund (IMF) maintains its 5.4 percent growth forecast for the Philippine economy in 2021, but is monitoring the economic impact of new COVID-19 variants in the country.
According to Yongzheng Yang, the IMF’s Resident Representative in the Philippines, there has been no revision to the country’s growth forecast based on the World Economic Outlook (WEO) Update released on July 27.
“The Delta variant of the coronavirus is a concern and we are monitoring its potential impact on the economy. We will let you know if there is any update on this front,” he added.
IMF’s 2022 growth forecast for the country is 7 percent.
Its growth forecast for the Philippines for this year is lower than the government’s 6% to 7% target band, while the 2022 forecast is at the lower end of the 7-9% target band set by economic managers.
Following the Article IV Consultation held by IMF executives with Philippine officials and the private sector from May 21 to June 11, the latter believe that fiscal space allows the government to address the pandemic’s impact on the vulnerable sector.
Factors identified as downside risks to growth include Covid-19 supply constraints and delays in the vaccination program.
IMF executives said another uptick in local Covid-19 infections will likely increase the effects of external shocks on interest rates and inflation.
Recently, health officials reported local transmissions caused by the Delta variant, which experts said are more contagious and have caused havoc in several countries like India and Indonesia.
Health experts thus have raised the need to implement stricter quarantine measures as early as possible to prevent the further rise of domestic Covid-19 infections.