MANILA — Moody’s Analytics is betting on a 6.6 percent Gross Domestic Product (GDP) growth for the Philippines in the second quarter of 2018, which if achieved, would be solid performance from a country quickly earning a reputation as a regional growth leader.
This is modestly lower than the 6.8 percent GDP advancement the country registered during the year’s first quarter.
Amid the lower figure, the report cited that consumer spending in the country is “healthy” on account of the robust growth of remittances from Overseas Filipino Workers (OFWs) and “a firm labor market.”
Moody’s Analytics economist Veasna Kong, in response to queries from the Philippine News Agency (PNA), said the level of consumption in the country is still healthy but noted that it is likely to be softer compared to the past two years.
This, he said, is one of the factors for the lower GDP growth forecast for the second quarter this year.
“For Q2, GDP growth likely slowed over the year compared to Q1, in part due to the tax reforms and its impact on consumers,” he said.
He explained that “cycles in consumer price inflation can at times lead those in consumer spending, so there is sometimes a lag between inflation developments and consumption growth.”
“Over 2018, we expect consumer spending growth to come in weaker than in 2017,” he said.
Amid this projection, the report said investment is expected to remain strong “as the government boosts infrastructure development” and external demand to still be solid.
These factors were seen to have primary contributions to economic output from April to June this year but warned that “rising pressures will need watching.”
Headline inflation is at a five-year high and is well above Bangko Sentral ng Pilipinas’ target band of two to four percent, which has prompted two policy rate hikes this year.
BSP officials earlier said the hikes were meant to support growth while ensuring price stability in the country. (Joann Villanueva/PNA)
