ADB expects PH inflation to remain high
GDP forecast unchanged
The Asian Development Bank (ADB) has slightly raised its forecast for the rate of increase in consumer prices in the Philippines for this year as inflationary pressure continues to build up.
Based on the ADB Asian Development Outlook 2018 Update report released yesterday, the Manila-based multilateral institution said that inflation this year may clock in at 5.3 percent, quicker compared with its earlier forecast of 5.0 percent.
ADB’s latest projection is also above the government’s target of 3.0 percent to 4.0 percent and will be its highest level in a decade.
“Food prices rose significantly owing to weak agricultural output, and high global oil prices early in the year and new excise taxes contributed to inflation. While inflation is expected to ease, the full-year average is still likely to exceed the projection,” ADB said.
In January to November, the country’s inflation already averaged at 5.2 percent, well above from 2.9 percent registered in the same period last year.
Inflation peaked in October at 6.7 percent amid skyrocketing commodity prices, particularly rice and petroleum products. But these index heavyweights are expected to soften this month after global crude prices dropped while the rice tariffication law will take effect next month.
“The inflation forecast for 2018 is therefore revised up from 5.0 percent to 5.3 percent. The recent buildup in inflationary pressure should moderate next year, with inflation still projected at 4.0 percent,” the ADB said.
“Tight monetary policy will [also] kick in following a cumulative rate hike of 175 basis points implemented from May to November 2018,” the bank added.
Meanwhile, the ADB kept its economic growth forecasts for Philippines unchanged at 6.4 percent for this year and 6.7 percent in 2019.
In the first three quarters of the year, the country’s gross domestic product (GDP) averaged at 6.3 percent, below the Duterte administration’s target of about 7.0 percent to 8.0 percent.
“GDP growth is seen accelerating through 2019, supported by robust public and private investment. Growth forecasts are maintained at 6.4 percent for 2018 and 6.7 percent for 2019,” ADB said.