Philippines Still the Fastest Growing Economy in ASEAN

This year, the Philippines is expected to be the fastest growing economy among the countries in the ASEAN, even as its collective GDP has slowed down from 5.2 percent in 2013 to 4.7 percent in 2014. The International Monetary Fund (IMF) maintained its 6.2 percent growth forecast for the Philippines in 2014 due to robust demand for goods and favorable policies. 

The IMF’s 2015 growth forecast for the Philippines is much more modest at 6.3 percent because of “tighter global financial conditions triggered, for instance, by greater volatility induced by US monetary policy normalization or a spike in global risk aversion.”

The IMF pegged the country’s 2014 gross domestic product (GDP) growth at 6.5 percent earlier, but cut it down to 6.2 percent in July after a significant slowdown during the first quarter of the year. Manufacturing and export rallied in the next quarter, boosting growth by 6.4 percent but still slower than 2013’s second quarter growth of 7.9 percent.

IMF representative to the Philippines Shanaka Jayanath Peiris said that the 6.2 percent forecast remains because economic changes and exports performance were very similar to expectations. In July, manufactured goods were valued at $5.461 billion, while exports totaled $35.129 billion.

The IMF’s forecast is considerably lower than the Philippine government’s 7-8 percent target, but the country is still ahead of Vietnam (5.6 percent), Indonesia (5.5 percent), Malaysia (5.2 percent) and Thailand (4.6 percent).

The World Bank’s latest growth forecast for the Philippines is 6.4 percent in 2014, 6.7 percent in 2015 and 6.5 percent in 2016, based on the expectation that the government would increase spending and reform fiscal policies.

Similarly, the Asian Development Bank’s (ADB) lowered its growth forecast to 6.2 percent for 2014 due to reduced government spending, inflation and tighter monetary policies. Both financial institutions, however, also expect the Philippines to be the fastest growing economy in Southeast Asia in 2014 and 2015.