The Philippine economic system would possibly 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) progress forecast on the Philippines for this yr to six p.c, from 6.2 p.c 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 p.c within the second half which, the Fitch unit stated, could be “unlikely.”
However the downwardly revised forecast nonetheless matched the lower-end of the 6 to 7 p.c progress 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 progress within the three months by way of June had been magnified after being in comparison with the year-ago stage, when GDP expanded by simply 4.3 p.c.
Knowledge confirmed the economic system grew by simply 0.5 p.c on a quarter-on-quarter foundation within the April-June interval.
“The most recent progress outturn clearly confirmed that we’ve got 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 proportion factors (pp) to the newest headline GDP progress, halving the robust 2.4 pp share recorded within the earlier quarter.
“In opposition to 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 progress could be one of many key information factors that the Bangko Sentral ng Pilipinas (BSP) would contemplate at its Aug. 15 financial coverage assembly.
Some economists anticipated the BSP would possibly kick off its easing cycle this week after progress of client spending—which traditionally accounts for over 70 p.c of GDP—eased to 4.6 p.c, the weakest seen postpandemic.
Nevertheless, there have been market watchers believing that the above-target inflation fee of 4.4 p.c in July might delay the speed cuts, though they didn’t rule out the opportunity of an off-cycle fee discount as floated by Governor Eli Remolona Jr. himself.
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“The silver lining is that home demand has held up fairly nicely,” BMI stated. “We anticipate imminent fee cuts by the BSP to supply an additional raise to home exercise.” INQ
