MANILA: Easing inflation likely lifted the Philippines economy’s growth pace a little in 2018’s fourth quarter, a Reuters poll showed, giving the central bank more flexibility in managing interest rates.

The median forecast from 12 economists was for gross domestic product for the December quarter to have expanded by 6.2% from a year earlier, marginally up from July-September’s 6.1%, a three-year low.

Only two of the 12 analysts gave forecasts for seasonally adjusted quarterly growth. One projected a 1.5% expansion from the prior three months, and the other 1.4% growth, same as in the July-September quarter.

In November, annual inflation came off its highest level in nearly a decade, and further slowed to 5.1% in December, and that should have underpinned domestic consumption at the end of 2018, analysts said.

Higher government spending on infrastructure and an expected recovery in agriculture, thanks to better weather conditions, also point to an improved pace of economic growth in October-December, they added.

The anticipated improvement “could be a ‘foretaste’ of a more convincing full- year growth recovery in 2019”, said Emilio Neri, economist at the Bank of the Philippine Islands.

With strong domestic demand, aided by more spending ahead of legislative and local elections in May, and lower inflation anticipated this year, economists said the central bank would, leave its benchmark interest rate on hold at 4.75%, and might even make an eventual cut.

The central bank paused its interest-rate increases in December to allow its five straight previous rate hikes, totalling 175 basis points, to work their way into the economy.

Some analysts believe that marked the end of its tightening cycle.

Masyita Crystallin, economist at DBS, said she expects no policy hike this year as inflation should ease further on lower oil prices and as the impact of new and higher taxes on certain items and commodities fades.

The central bank’s first meeting of this year will be Feb 7. — Reuters

Source: https://www.thestar.com.my/business/business-news/2019/01/22/slightly-faster-gdp-growth-seen-for-the-philippines/#EZky8qkLJCvoMC42.99