By Anna Leah Gonzales | Philippine News Agency
The Philippines’ economic growth is expected to accelerate in the fourth quarter of the year to 6 percent from 5.2 percent in the third quarter, driven by a strong domestic demand, easing inflation, and lower policy rates, an economist from the multinational bank Citi said.
“We expect growth to pick up to 6 percent in Q4 (fourth quarter), supported by stronger domestic demand that is likely to be bolstered by lower policy rate and inflation, as well as the recent RRR (reserve requirement ratio) cut that would continue to support credit expansion,” Citi economist for the Philippines and Thailand Nalin Chutchotitham said in a report released on Monday.
Looking ahead, Chutchotitham said the recent enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Law would help support the continuation of private sector investments and foreign direct investments growth.
The new law cuts the corporate income tax rate to 20 percent from 25 percent, provides additional deductions on power expenses, and streamlines the value-added tax refund processes.
The Bangko Sentral ng Pilipinas (BSP) has so far cut policy rates by a total of 50 basis points this year.
It also reduced banks’ RRR by 250 basis points, which Chutchotitham said would release more liquidity into the banking system and likely continue to support strong credit expansion.
Inflation, meanwhile, is well within the government’s 2–4 percent target, settling at 2.3 percent in October this year.
“Household consumption is expected to continue improving, supported by a lower interest rate and improved consumer sentiment as inflation continues to stabilize,” said Chutchotitham.
Infrastructure projects are also expected to proceed at a faster pace in the fourth quarter of 2024 and first quarter of 2025.
Full-year 2024 economic growth, meanwhile, is projected to settle at 5.8 percent and further accelerate to 6.0 percent in 2025.
