IMF expects faster growth this year for ASEAN-5

The International Monetary Fund (IMF) has raised growth projections for the ASEAN-5 grouping, which includes the Philippines, saying the global economy was recovering better than expected. The Fund's World Economic Outlook Update, released late on Tuesday, Manila time, forecast collective growth of 4.7 percent this year — up from 1.3 percent in 2009 — for Indonesia, Malaysia, the Philippines, Thailand and Vietnam. Meanwhile, A 5.3 percent expansion is expected next year for the five member-states of the Association of Southeast Asian Nations. Both are up from forecasts of 4 percent and 4.7 percent last October. Country-specific forecasts were not available. IMF Resident Representative Dennis J. Botman told BusinessWorld projections for the Philippines would be announced next month. "Our latest projections for the Philippines will be reported in the staff report for the Article IV consultation, which we expect to release publicly towards the end of February following discussions by the IMF's executive board later this week," Botman said in an e-mail. Last November, the Washington-based IMF forecast 3.5 percent growth this year for the Philippines, citing private consumption and growth in remittances. The outlook is at the upper end of the government's target range of 2.6-3.6 percent. The Fund also forecast 1.5 percent growth for 2009, also within the official target of 0.8-1.8 percent. A state planning official earlier this week said 2009 growth could be in the range of 0.7-1.0 percent. Full-year results are due today. The IMF said Asia's developing economies were seeing acceleration in 2010, led by an expected 10-percent growth for China. It said Asian developing economies were set to grow at an average 8.4 percent this year as well as in 2011, compared with 6.5 percent in 2009. China, the traditional global growth driver, is likely to post 10 percent growth this year, up by one percentage point from the 9 percent forecast made in October. But the Fund said growth in the world's most populous nation could slow to 9.7 percent next year. China expanded by 8.7 percent in 2009. Rising inflation, along with a government clampdown on bank lending and hike in borrowing costs, has kept markets on edge in recent weeks amid fears that a Chinese economic slowdown could dampen global recovery. Jorg Decressin, head of the IMF's world economic studies division, ruled out immediate risks in China, in a media briefing after the report's release. "There is no serious market-bubble risk," he said. The fund said "key emerging economies in Asia are leading the global recovery" as the region became the first to rebound from a global downturn stemming from the worst financial crisis in decades. India is expected to join China in providing impetus to growth in Asia this year and in 2011. India should post 7.7 percent growth in 2010, the IMF said, revising upward by 1.3 percentage points its earlier forecast. The world's second most-populous nation is also expected to grow 7.8 percent next year after managing 5.6 percent last year, according to IMF projections. Japan is poised to emerge with a growth of 1.7 percent in 2010 — unchanged from the last forecast — after a sharp 5.3 percent contraction last year, the IMF said, adding that Asia's richest economy could accelerate to 2.2 percent next year. Asia's growth forecast is above that for the world's emerging and developing economies of about 6 percent in 2010 following a modest 2 percent last year. The IMF expects more rapid output in 2010 for the world's developing economies. "Stronger economic frameworks and swift policy responses have helped many emerging economies to cushion the impact of the unprecedented external shock and quickly re-attract capital flow," it said. The global economy, meanwhile, is expected to grow by 3.9 percent this year and by 4.3 percent in 2011, up from the previous forecast of 3.1 percent and 4.2 percent, respectively. "Global production and trade bounced back in the second half of 2009. Confidence rebounded strongly on both the financial and real fronts, as extraordinary policy support forestalled another Great Depression," the IMF said. "Final domestic demand was very strong in key emerging and developing economies, although the turn in the inventory cycle and the normalization of global trade also played an important role," it added. "Driving the global rebound was the extraordinary amount of policy stimulus. Monetary policy has been highly expansionary, with interest rates down to record lows in most advanced and in many emerging economies. Fiscal policy has also provided major stimulus in response to the deep downturn." The Fund, however, said anemic bank lending and huge public debt posed challenges. It also warned that premature exits from supportive policies "may undermine global growth and its rebalancing." To boost domestic demand amid the downturn, the government last year announced a P330-billion stimulus package. The Bangko Sentral ng Pilipinas, for its part, cut rates to a record low, among other measures. Monetary officials will meet on Thursday to determine policy. They have stressed that any exit strategy would be phased in as they continue to monitor inflation expectations and other economic developments. — reports from Alexis Douglas B. Romero and AFP