GDP growth slowdown expected to persist

ECONOMIC EXPANSION will likely ease further in 2019 as last year’s interest rate hikes are expected to pull down consumer spending, Natixis Research said, even as it noted that the Philippines will remain “resilient” to global slowdowns.

The global economic research outfit projects Philippine gross domestic product (GDP) growth at 6.2% this year, down from a 6.4% forecast for 2018. If realized, this would be the slowest pace in four years, and would miss the 7-8% growth target set by the administration of President Rodrigo R. Duterte.

Philippine GDP growth averaged 6.3% in 2018’s first three quarters, against a downwardrevised 6.5-6.9% government forecast for the entire year. Overall economic expansion slowed to 6.7% in 2017 from 2016’s 6.9%, though keeping within the government’s 6.5%-7.5% target range.

“The great news about the Philippines is that its investment growth is in double digits, which is much-needed after decades of lackluster investment,” Natixis economist Trinh D. Nguyen said in a report published in December.

“While investment remains strong, consumption is decelerating to 5.2% year-on-year in Q3 2018 as higher price pressures bite,” she noted.

“We also expect the tightening measures so far filter through to dampen domestic demand.”

Ms. Nguyen was referring to successive increases in benchmark interest rates fired off by the Bangko Sentral ng Pilipinas in 2018. Policy rates went up by a total of 175 basis points (bp) as the central bank sought to rein in price expectations, at a time when inflation soared to nine-year highs. —