The Philippine economic system may develop slower than beforehand anticipated in 2024, after favorable base results masked a weak point within the second quarter growth and painted a “deceptive image” of the economic system’s well being, BMI Analysis stated.
In a commentary despatched to reporters on Monday, the unit of the Fitch Group trimmed its gross home product (GDP) development forecast on the Philippines for this 12 months to six %, from 6.2 % beforehand.
READ: Philippine economic system expands 6.3% in Q2, says PSA
To hit the previous projection of BMI, the home economic system must develop by round 6.4 % within the second half which, the Fitch unit stated, can be “unlikely.”
However the downwardly revised forecast nonetheless matched the lower-end of the 6 to 7 % development goal vary of the Marcos administration.
Overestimated
What triggered the downward revision was the 6.3-percent year-on-year growth within the second quarter that, BMI defined, was “flattered” by base results. This implies development within the three months via June had been magnified after being in comparison with the year-ago stage, when GDP expanded by simply 4.3 %.
Information confirmed the economic system grew by simply 0.5 % on a quarter-on-quarter foundation within the April-June interval.
“The most recent development outturn clearly confirmed that we now have overestimated the well being of the Philippine economic system,” BMI stated.
Additional raise
“A lot of this weak point stemmed from a poor efficiency within the exterior sector, as we had anticipated,” it added. Figures confirmed exports solely contributed 1.2 share factors (pp) to the newest headline GDP development, halving the robust 2.4 pp share recorded within the earlier quarter.
“Towards the backdrop of a slowing world economic system in H2, exterior demand will show even much less supportive over the approaching quarters.”
READ: DBM hails GDP report, vows to create extra jobs to maintain financial upswing
The second quarter GDP development can be one of many key information factors that the Bangko Sentral ng Pilipinas (BSP) would take into account at its Aug. 15 financial coverage assembly.
Some economists anticipated the BSP may kick off its easing cycle this week after development of shopper spending—which traditionally accounts for over 70 % of GDP—eased to 4.6 %, the weakest seen postpandemic.
Nevertheless, there have been market watchers believing that the above-target inflation fee of 4.4 % in July may delay the speed cuts, though they didn’t rule out the potential of an off-cycle fee discount as floated by Governor Eli Remolona Jr. himself.
Your subscription couldn’t be saved. Please strive once more.
Your subscription has been profitable.
“The silver lining is that home demand has held up fairly properly,” BMI stated. “We count on imminent fee cuts by the BSP to offer an extra raise to home exercise.” INQ
