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Philippines: Slower Q3 GDP growth seen
GROSS domestic product (GDP) growth for the Philippines in the third quarter this year is seen slowing down to the 5.9-percent to 6.6-percent range.
The Bangko Sentral ng Pilipinas said in its latest Monetary Policy Report that the country’s GDP growth would settle within the revised 6.5- to 7.5-percent target set by the Cabinet-level Development Budget Coordination Committee
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., told The Manila Times in an email that the risk factors for his 6-percent year-on-year estimate for third-quarter GDP growth include higher inflation and prices caused by the Russia-Ukraine war that started earlier this year.
Higher interest rates, financing and borrowing costs largely brought about by more aggressive US Federal Reserve rate hikes and other central banks to bring down elevated inflation would also drag further economic growth for the third quarter this year, Ricafort added.
In a separate email to The Times, China Bank chief economist Domini Velasquez attributed the slower growth projection of 6.6 percent to the impact of higher prices on consumption.
“We expect consumers to curtail spending on nonessential goods and services due to continued high inflation,” said Velasquez.
“Also, spending on big-ticket items, such as autos and homes, will likely be deferred as banks impose higher interest rates on loans,” added Velasquez.
The China Bank economist further said that the external outlook is “also dimmer,” as exports are expected to weaken as the global economy slows.
Meanwhile, Velasquez said imports will increase due to elevated commodity prices, hence, a wider trade deficit.
For his part, Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines (UBP), in a separate email to The Times, said he does not expect the economy to fall into a recession as he sees fourth-quarter GDP growth to be at 5.1 percent.
“UBP staff also estimated a narrowing output gap in 2Q22 (second quarter 2022) as the peak of actual output [over] potential GDP is now in the rearview mirror,” added Asuncion.
On the other hand, he said the GDP forecast for the fourth quarter this year is crucial to the 2023 outlook.
“We downgraded [the fourth quarter 2022] GDP growth to 5.1 percent year on year that would pave the path for a slower 2023 GDP outlook of 5.7 percent,” Asuncion mentioned.
He explained that the global downturn (not a severe recession) is imminent, with the US and the Euro area potentially leading the way.
Asuncion added that the risk to this baseline growth is still toward the downside if export volumes weaken further.
Meanwhile, Velasquez expects the story to remain the same for the rest of the year as inflation will likely continue its uptrend in the fourth quarter.
“However, we are hopeful that the economy can reach the low end of the government’s full-year target of 6.5 percent,” said Velasquez.
Source: https://www.manilatimes.net/2022/09/21/business/top-business/slower-q3-gdp-growth-seen/1859233