Press Release No. 12/263

Press Release: Statement at the Conclusion of an IMF Staff Mission to the Philippines

July 20, 2012

An International Monetary Fund (IMF) staff mission led by Ms. Rachel van Elkan and accompanied by External Sector Economist Ms. Longmei Zhang and the incoming IMF Resident Representative Mr. Shanaka Jayanath Peiris, visited Manila during July 16-19. The mission met with Governor Tetangco, Secretaries Purisima, Abad, and Balisacan, and other senior public sector officials and private sector representatives, and focused on recent economic developments and the outlook given the uncertain global environment.

The following statement was issued in Manila today at the conclusion of a routine IMF staff visit:

“The Philippine economy has sustained its solid momentum, and has the policy space to support growth if tail risks from the global economy materialize. Macroeconomic conditions remain generally sound and the authorities’ policy management is supporting confidence. Like other countries in the region, the Philippines faces a more fragile global economic environment that could produce headwinds in the coming quarters. The key near-term challenge is to maintain macro-financial stability given the expectation for robust growth and strong capital inflows in the Fund’s baseline forecast for the Philippines, while building the foundations for higher and more inclusive growth.

“After its subdued growth in 2011, the economy rebounded strongly in the first quarter of 2012 to 6.4 percent (year-on-year)—among the best performing in Asia—partly reflecting a spike in net exports and fixed investment. Growth is expected to stabilize around 4.8 percent and 4.9 percent in 2012 and 2013, respectively, in line with soft global economic conditions reflected in the IMF’s World Economic Outlook forecast.

“The current account and the overall balance of payments are forecast to remain in surplus and inflation is expected to remain well within the target. Public finance continues to improve while the financial system has sustained its resiliency notwithstanding the more challenging external markets. Although the global environment indeed remains a key downside risk to the outlook, if the momentum from the first quarter persists, growth could surprise on the upside.”