Private economists cut inflation forecasts further

MANILA, Philippines — Economists of private banks lowered anew their inflation forecasts for the next two years amid the continued implementation of the Rice Tariffication Law as well as the strengthening of the peso against the dollar.

The latest survey of private economists conducted by the Bangko Sentral ng Pilipinas (BSP) from Dec. 9 to 23, 2019 showed mean inflation would average three percent instead of 3.1 percent in 2020 and 2021.

Dennis Lapid, director of the central bank’s Department of Economic Research, said analysts and economists anticipate a benign inflation environment in 2020.

Lapid said risks to the inflation outlook are likely to be tilted to the upside due mainly to the implementation of other packages under the government’s Comprehensive Tax Reform Program such as the excise taxes on oil and tobacco.

Inflation averaged 2.5 percent last year.

The benign inflation and softer gross domestic product (GDP) growth last year paved the way for an easing cycle wherein the Monetary Board slashed interest rates by 75 basis points.

Lapid said downside risks to inflation are seen to emanate from the continued implementation of non-monetary policy actions such as Republic Act 11203 or the Rice Tariffication Law as well as the stronger peso.

For this year, Mizuho Bank has the highest inflation forecast at 3.6 percent, followed by Standard Chartered Bank at 3.3 percent, Ayala-led Bank of the Philippine Islands and Barclays at 3.1 percent, Rizal Commercial Banking Corp. at 2.7 to 3.1 percent as well as BDO, Bangkok Bank, Bank of China, China Bank, CTBC Bank, Robinsons Bank, and Security Bank with three percent.

On the other hand, Korea Exchange Bank has the lowest forecast at 1.75 percent.