Stanchart still sees 6% PH growth this year

British bank Standard Chartered Bank (Stanchart) has maintained its six percent growth projection for the Philippines this year while expecting a higher 6.5 percent economic expansion in 2025.

Stanchart economist Jonathan Koh, in briefing on Tuesday, Feb. 20 to discuss prospects for the first half of 2024, expects the local economy’s consumption “to remain a pivotal driver but pace of expansion in H1 (first half)” is still seen as moderate.

He also expects investments to be subdued in the first six months of this year due to high interest rates globally and domestically which “may regain momentum in H2 on rate cuts.”

Stanchart’s GDP forecasts are lower than the government’s 6.5 percent to 7.5 percent for 2024 but within the target next year albeit on the low side of 6.5 percent to eight percent.

Meanwhile, the foreign bank adjusted lower its inflation forecast for the country this year and 2025 at 3.5 percent, mirroring other private sector economists’ estimates and the Bangko Sentral ng Pilipinas’ (BSP) own forecast – all below four percent and within the target range of two percent to four percent. The BSP’S riskadjusted inflation forecast is however on the high side at 3.9 percent.

With a decelerating inflation, Stanchart expects the BSP’S Monetary Board to cut the interest rates – currently at 6.5 percent – by a 100 basis points (bps) this year to 5.5 percent, and by another 100 bps next year to 4.5 percent.

Despite the rate cuts, the bank does not see the exchange rate appreciating stronger than past P55, and expects the peso in this range this year and in 2025.

Koh said an appropriate interest rate differential between the BSP rate and the US Federal Reserve rate may not be enough since “rate differentials may not be Php-supportive”