MANILA, Philippines — The economic growth forecast for the Philippines for this year has been revised downward due to high inflation and interest rates that may weaken consumption, according to a survey of the Japan Center for Economic Research (JCER).
The think tank’s latest Consensus Survey on Asian Economies showed the Philippines is now expected to grow by 5.1 percent this year, lower than the 5.9 percent forecast in the previous survey in June.
This forecast is also below the six to seven percent economic growth the government is aiming for this year.
The forecast is based on a survey conducted by JCER from Sept.1 to 21 of this year, with the economists polled including Metropolitan Bank and Trust Co. research and business analytics officer Ina Judith Calabio, China Banking Corp. chief economist Domini Velasquez, Union Bank of the Philippines chief economist Carlo Asuncion, Philippine Equity Partners managing director Jojo Gonzales, and ING Bank senior economist Nicholas Mapa.
JCER’s survey showed the Philippine economy is projected to grow by 4.8 percent in the third quarter and by a faster five percent in the fourth quarter of this year.
The economy posted slower growth of 4.3 percent in the second quarter from 6.4 percent in the previous quarter, and 7.5 percent in the second quarter last year as elevated inflation and high interest rates dampened consumption.
In the first semester, the economy grew by 5.3 percent.
“We downgraded our GDP (gross domestic product) forecast because of the break in revenge consumption amid a high interest rate setting and other challenges,” Asuncion said.
Mapa said slowing bank lending and the lack of government spending are headwinds for the economy.
For 2024, the growth forecast for the Philippines was revised to 5.9 percent from the previous projection of 6.2 percent.
The growth forecast for the Philippines for 2025 was also trimmed to 6.1 percent from 6.3 percent, previously.
Rising inflation remains the top risk to the country’s growth in the coming 12 months.
The JCER survey showed inflation is expected to average 5.9 percent this year, before slowing to 3.5 percent next year, and to 3.1 percent in 2025.
Inflation quickened to 5.3 percent in August and ended a six-month downtrend amid rising food prices.
For the January to August period, inflation averaged 6.6 percent, higher than the central bank’s two to four percent target range.
Aside from inflation, rising commodity prices and increasing government debt were cited as top risks for the Philippines.
The El Niño weather phenomenon was also cited as a concern as this typically damages the economy, particularly the agricultural sector.