Moody’s unit sees PH growth slowdown
Philippine economic growth likely grew at a slower pace of 6.6 percent in the second quarter, Moody’s Analytics said on Friday, with support having come from domestic consumption and infrastructure-led investments, among others.
“Consumer spending is healthy, thanks to steady inflows of overseas worker remittances and a firm labor market,” the Moody’s Corp. unit said in a preview of upcoming Asia-Pacific data releases.
“External demand has remained solid but high base effects are at play,” it added.
In the preview, Moody’s Analytics put first quarter gross domestic product (GDP) growth at 6.9 percent, although the official figure remains at 6.8 percent according to the Philippine Statistics Authority, which is scheduled to released Q2 results on August 9.
Second quarter growth a year earlier was 6.7 percent.
In addition to remittance-fueled spending, the labor market and external demand, the Moody’s unit said investments were robust and “likely to remain strong, as the government boosts infrastructure development”.
“Although these factors likely supported 6.6 percent GDP growth in second quarter, rising price pressures will need watching,” it said.
”Headline inflation is at a five-year high and is well above Bangko Sentral ng Pilipinas’ target band of 2 percent to 4 percent, which has prompted two policy rate hikes this year,” it added.
The second quarter GDP results will be released just hours ahead of a Monetary Board policy meeting that is widely expected to result in a fresh rate hike of 50 basis points (bps), more than the 24-bps adjustments previously ordered in May and June.
The meeting will also take into account July inflation data that will be released on August 7, with the consensus pointing to another above-target result following June’s five-year high of 5.2 percent.
Higher-than expected inflation has prompted economic managers to raise their forecast for the year to 4.0-4.5 percent from 2.0-4.0 percent previously but they remain confident that GDP growth will hit 7.0-8.0 percent in the medium-term.
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