The Philippine economic system may develop slower than beforehand anticipated in 2024, after favorable base results masked a weak spot within the second quarter enlargement and painted a “deceptive image” of the economic system’s well being, BMI Analysis mentioned.
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 12 months 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 mentioned, can 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 enlargement within the second quarter that, BMI defined, was “flattered” by base results. This implies progress within the three months by means of June had been magnified after being in comparison with the year-ago degree, when GDP expanded by simply 4.3 p.c.
Information 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 mentioned.
Additional elevate
“A lot of this weak spot 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 most recent headline GDP progress, halving the sturdy 2.4 pp share recorded within the earlier quarter.
“Towards the backdrop of a slowing international 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 can 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 may 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.
Nonetheless, there have been market watchers believing that the above-target inflation charge of 4.4 p.c in July might delay the speed cuts, though they didn’t rule out the potential for an off-cycle charge 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 mentioned. “We anticipate imminent charge cuts by the BSP to offer an additional elevate to home exercise.” INQ
