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Philippines growth to further slow in 2019 — ING
MANILA, Philippines — Dutch financial giant ING Bank expects the Philippine economy to slow down further next year as inflation is expected to remain elevated while rate hikes may take its toll on growth.
In a report, ING Bank Manila senior economist Nicholas Mapa said the Philippines’ gross domestic product (GDP) growth may ease to 6.1 percent in 2019 from the projected 6.2 percent in 2018.
He added recent monetary policy adjustments are expected to sap economic growth momentum.
In response to above-target inflation in 2018, the Bangko Sentral ng Pilipinas (BSP) unloaded an aggressive 175-basis point rate hike salvo that would continue to weigh on overall growth momentum in 2019.
“Elevated borrowing costs will sap both consumption and investment momentum and this will be a key theme throughout 2019,” he said.
The economist pointed out inflation is expected to trend lower and eventually fall within target by the second half after monetary and non-monetary policy measures feed into the economy.
For the first half, Mapa said election-related spending would boost growth, but a five-month ban on public spending could offset the positive momentum.
“Post-election, decelerating inflation will partially restore lost purchasing power while also helping to lead financing costs lower. This should lead to a slightly faster pace of growth in second half as household spending, business investment and government spending accelerate from the first half,” he said.
Mapa said three main threats and opportunities next year include the current account position of the country, the hawkish stance of the Bangko Sentral ng Pilipinas, and the pressure on the peso would largely determine whether the country would be able to outpace its growth path or slip below forecast.
Source: https://www.philstar.com/business/2018/12/04/1873908/philippines-growth-further-slow-2019-ing#ZP0br2W8guXtpruJ.99