ASEAN KEY DESTINATIONS
IMF raises growth forecast for Asean 5
The International Monetary Fund (IMF) on Tuesday raised slightly its average growth forecast for the Asean 5, which includes the Philippines. In its World Economic Outlook (WEO) Update, the IMF forecast emerging and developing economies to grow by 6.5 percent this year and in 2012.
The same report said that the Association of Southeast Asian Nations 5-namely the Philippines, Vietnam, Indonesia, Malaysia and Thailand-would grow by an average of 5.5 percent this year and 5.7 percent in 2012. The latest 2011 forecast is higher than the 5.4 percent estimate contained in the WEO released on October 2010.
The Washington-based lender said the growth will come from the sustained strength in domestic demand in many developing Asian economies as well as rising global demand for commodities.
The IMF said the baseline projections assumed that the current policy actions manage to keep the financial turmoil and its real effects at the periphery of the euro area, resulting in only a modest drag on the global recovery.
Amid generally sluggish recovery and continued high savings in key emerging Asian economies, real yields are likely to remain low through 2011.
Under a baseline scenario in which contagion from turmoil in the euro area is contained, emerging market capital inflows are expected to remain strong and financial conditions robust.
Bond issuance by emerging market sovereigns and firms is expected to remain ample in 2011.
Low interest rates in mature markets and fairly strong investor appetite will continue to pose upside risks to emerging market flows and asset prices, despite some recent slowdown of inflows.
The IMF however warned of overheating pressures forming in the region.
It said that rapid growth in emerging and developing economies has narrowed or in some cases closed output gaps, thus causing consumer prices to rise.
The IMF update comes as the National Economic and Development Authority (NEDA) announced that the Philippines likely surpassed its economic growth target last year.
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