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Thursday, August 11, 2022

Philippines third quarter GDP seen accelerating as govt spending picks up

Philippines third quarter GDP seen accelerating as govt spending picks up© Reuters. A general view of the skyline from the Makati City Hall in Manila

MANILA (Reuters) – The Philippine economy likely expanded at a faster clip in the third quarter, driven by higher government spending and giving the central bank room to tackle stubbornly high inflation, a Reuters’ poll showed.

The median forecast of 12 economists polled by Reuters showed gross domestic product was expected to have grown 6.3 percent in July-September from a year earlier, picking up from the previous quarter’s expansion of 6.0 percent, a near three-year low.

Only three of the 12 analysts gave forecasts for seasonally adjusted quarterly growth, with two of them projecting a 2.1 percent expansion from the June quarter, faster than the previous quarter’s 1.3 percent growth. The other one expects a slower 0.5 percent expansion.

A strong showing in the third quarter is likely to support views the central bank will raise rates for a fifth time this year when it meets on Nov. 15, to cool inflation which steadied at its highest rate in almost a decade in October.

The Philippine Statistics Authority is due to release the GDP figures on Thursday.

Analysts said steady remittance inflows from Filipinos abroad and higher infrastructure spending helped cushion the impact of inflation on domestic demand.

But concerns remain about a weak peso and rising domestic and global interest rates, which have dampened business sentiment. Business confidence fell to its lowest level in more than eight years in the third quarter, central bank data showed.

“Amid the strong prospects for economic growth, near term challenges need to be properly addressed,” the ASEAN+3 Macroeconomic Research Office said in a report, citing rising inflation expectations and a volatile external environment.

Soaring consumer prices have prompted the Philippines to shave its economic growth target for this year to 6.5-6.9 percent from 7-8 percent previously and raise its inflation forecasts for this year and next.

Annual inflation was unchanged at 6.7 percent in October from the previous month, data on Tuesday showed, the first time the rate has steadied this year, but it surpassed the median 6.5 percent forecast in a Reuters poll.

The Bangko Sentral ng Pilipinas has raised interest rates at its last four consecutive meetings by a total of 150 basis points, bringing its benchmark rate to 4.5 percent to slow inflation and meet its 2-4 percent target next year.

($1 = 53.1100 Philippine pesos)

(Polling by Enrico dela Cruz and Karen Lema; Editing by Sam Holmes)

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Source: Investing.com

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