According to ANZ, the Philippines’ economy is expected to grow by 5% this year.

ANZ RESEARCH slashed its Philippine gross

The prediction for this year’s growth in gross domestic product (GDP) has been revised to 5%, as economic activity is decreasing at a faster rate than originally expected.

“In its most recent Asia Economic Outlook, it stated that the expected GDP growth for the full year of 2023 has been lowered to 5% from the previous forecast of 5.8%. This revision was made due to the weaker-than-expected performance in the second quarter of 2023 and the current subdued outlook.”

The ANZ’s projected growth is significantly lower than the government’s target of 6-7% growth for the current year.

first quarter

Following a decline, the growth of Philippine GDP dropped to 4.3% in the second quarter, down from 6.4% in the first quarter.fi3rd quarter of 2021,
During the third quarter of 2021, there was a 7.5% increase compared to the same period in 2022.fi

In the first half, the growth of GDP averaged 5.3%.

ANZ stated that the growth of private consumption is expected to decrease due to a slower growth in remittances and a lackluster trend of job creation.

In the second quarter, household spending, which makes up 75% of GDP, increased by 5.5%. This was the smallest growth rate in private consumption since the first quarter of 2021, when it decreased by 4.8%.

According to ANZ’s predictions, there will be a 5.3% increase in private consumption this year, which is lower than the 8.3% increase in 2022.

According to ANZ, the majority of the recently generated jobs are in the fields of agriculture and sales, which typically offer lower salaries.

The data on the flow of funds suggests that households are spending more than they are saving. The only significant source of support for household spending has been through credit. The use of credit for consumption has been increasing by a large amount and can be seen in strong sales of automobiles and imports of consumer goods.

The growth of credit is not expected to continue due to high interest rates and stricter lending standards from banks, according to the statement.

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The BSP has increased interest rates by 425 bps to control inflation, raising it to 6.25%, the highest it has been in nearly 16 years.flation.

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In general, the forecast for household spending can be better expressed asfl
ANZ stated that the moderation in consumer confidence was reflected in the data.

According to ANZ, a significant number of companies are not intending to make investments or grow in the current year due to “inadequate demand” being a major limitation for businesses.

According to the statement, the future of exports is uncertain. The forecast for this year predicts a growth rate of 2.5%, significantly lower than the 10.9% growth seen in 2022.

ANZ stated that their projections for the growth of GDP in important markets for the exports of the Philippines indicate a decrease in demand in 2024. They acknowledge that the technology cycle is starting to recover, but it is still uncertain how strong the rebound will be. The competitiveness of the electronics industry in the Philippines is also a point of debate.

The Philippine economy is anticipated to recover in the following two years, as ANZ projects a 5.6% increase in GDP for 2024 and 6% for 2025. However, these projections fall short of the government’s growth targets of 6.5-8% for the same years.

CUT UNLIKELY IN 2024

In the meantime, ANZ predicts that the Bangko Sentral ng Pilipinas (BSP) will continue to keep its tightening cycle on hold for the remainder of the year.

According to our perspective, it is expected that the BSP will maintain a policy rate of 6.25% and a decrease is not anticipated, even in 2024.

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-reverse the increase in interest rates prior to the Monetary Board’s meeting on November 16.

August is

The rate of change in velocity during the month of August is fl

ANZ predicts that the recently implemented rice price ceiling and the potential consequences of increased food and energy costs will be closely monitored by the BSP, resulting in a firm stance on monetary policy. However, it is unlikely that there will be any additional interest rate increases in the near future.

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The situation has worsened because of the increase in food and energy costs.

10th straight month in June.

The rate of inflation continued to increase for the tenth consecutive month in June.fi

The rate dropped to 5.3% in August, marking the first decrease in seven months. The average rate over eight months is now 6.6%.

ño event has weakened slightly, the latest forecast still indicates a 70% chance of El Niño conditions during the Northern Hemisphere winter.”

“Although the strength of the approaching El Niño event has slightly diminished, the most recent prediction still shows a 70% likelihood of El Niño conditions occurring in the winter months of the Northern Hemisphere.”ño or the eff

The effectiveness of the recently implemented limit on rice prices has not yet been confirmed, but the current trend in inflation suggests that it will return to the central bank’s desired range of 2-4% by Q1 2024. This is later than our previous prediction of Q4 2023, according to ANZ.

flation averaging flation settling at 3.5%.

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This year’s CIT target was set by the government.fi

The maximum cap for this year’s CIT is P1.499 trillion, which is equal to 6.1% of the GDP.

The process of reducing the government’s spending will continue in the following years, but it is expected to happen at a slower rate than initially predicted. The government’s predictions for economic growth and revenue seem optimistic, especially considering the current weak economic drivers.

bt stood at P10.92 trillion

At the end of June, the National Government’s debt was at P10.92 trillion.fi

The cit-to-GDP ratio was 4.8% in comparison to 6.5% during the same period in 2022. – Luisa Maria Jacinta C. Jocson