MANILA, Philippines – Multilateral lenders International Monetary Fund (IMF) and Asian Development Bank (ADB) both raised their economic growth forecasts for the Philippines this year and next, citing the country’s improved fundamentals and resiliency to external headwinds.

In a report, the IMF raised the gross domestic product (GDP) outlook for the Philippines to 6.4 percent instead of six percent this year and to 6.7 percent instead of 6.2 percent next year.

Meanwhile, in an update to its Asian Development Outlook 2016, Manila-based ADB similarly raised its GDP forecast for the Philippines to 6.4 percent this year from an earlier six percent. It also raised the 2017 growth projection to 6.1 percent from 6.2 percent.

The country’s economic managers expect GDP to expand between six to seven percent this year and 6.5 to 7.5 percent in 2017.

“The outlook for the Philippine economy remains favorable despite external headwinds,” IMF said.

IMF said the Philippine economy continued to perform strongly as GDP growth accelerated to seven percent in the second quarter from 6.8 percent in the first quarter, boosted mainly by election-related spending.

This brought the GDP expansion to a three-year high 6.9 percent in the first half of the year from 5.5 percent in the same period last year and closer to the higher end of the six to seven percent target set by economic managers.

“The Philippine economy has performed well in recent years with rising potential growth and strong macro fundamentals. Economic growth is supported by robust domestic demand and is broadly in line with potential while the outlook for inflation is well within the target band,” IMF said.

However, the Washington-based multilateral lender noted underemployment and poverty rates have remained stubbornly high despite the sustained economic expansion.

“The strong economic performance, however, has not yet fully benefited a wide range of the population. Poverty and inequality remain high. Poor infrastructure has constrained private investment and job creation. Public investment has risen but continues to be low due to weak implementation capacity, while progress has been made on fiscal transparency,” it said.

Upside risks to growth include stronger domestic demand spurred by low commodity prices and further improvements in budget execution, IMF said.

On the other hand, it pointed out downside risks include the lower growth in China, tighter global financial conditions, and a surge in global financial volatility that could lead to capital outflows.

IMF said President Duterte has an opportunity to put the economy on a higher and more equitable growth path under its 10-point socioeconomic agenda.

The Duterte administration raised the budget deficit ceiling to three percent of GDP instead of two percent of GDP as it intends to ramp up infrastructure spending to as much as five percent of GDP.

IMF added the country’s monetary policy setting are currently appropriate but the central bank should stand ready to tighten if there are signs of overheating or credit growth accelerating with inflationary pressures.

ADB said the Philippines is performing better than expected on a surge of investment and strong expansion in consumption, prompting an increase in its growth forecast to 6.4 percent.

“Vigorous economic growth is expected to continue through 2016, though at a more moderate pace in the second half as the impact of election spending fades,” said ADB.

The bank said sustaining the Duterte administration’s economic reform agenda would be “vital to sustaining solid economic growth performance” specially when the country is in a position wherein risks form volatility on global financial markets are “cushioned by the improved macroeconomic fundamentals and a robust banking sector.”