PHL economy to play catch-up: Moody’s Analytics
THE Philippine economy is expected to play catch-up this year given the country’s first quarter GDP performance, according to Moody’s Analytics.
In an economic brief, Moody’s Analytics said the economy’s 5.7 percent growth was a “decent trot” in the first three months of the year and is well within its 6 to 7 percent full-year growth target.
Moody’s Analytics also expects the Bangko Sentral ng Pilipinas (BSP) to maintain key policy rates at 6.5 percent this week, but resolve to cut rates next quarter.
“The economy will play catchup in 2024 from its deep pandemic downturn. Bangko Sentral ng Pilipinas will likely stand pat on rates this month,” Moody’s Analytics said.
“And while the inflation print for April settled within BSP’S 2 to 4 percent target range, it will likely bump around the upper limit over the next few months as dry weather hits food harvests. At the earliest, rate cuts could begin next quarter, which would ease the pressure on households,” it explained.
In the brief, Moody’s Analytics said the economy benefited from gains in January and February which were enough to compensate for the sharp rise in inflation in March.
The think tank also said “trade was the star” of the country’s economic performance in the first quarter of 2024. Net exports turned positive given the faster rise in exports than imports.
Goods and service exports buoyed the country’s trade performance while tourist arrivals also continued to grow, recovering 72 percent of the prepandemic levels.
Moody’s Analytics also said labor market growth remained robust while remittances were able to buoy household consumption despite the slowdown to 4.6 percent.
“High borrowing costs have weighed on household budgets and private investment growth,” Moody’s Analytics stressed.
“Government spending—always a wildcard in the Philippines—rose 1.7 percent reversing from a 1 percent drop in the prior quarter, largely due to officials’ front-loading expenditures,” it added.
Moody’s Analytics also cited the contribution of the construction sector while mining and quarrying continued its decline for the fifth straight quarter.
Services remained the largest contributor to GDP -- 62 percent— and got a significant boost from accommodation and food services in the first three months of the year.