An economist of Sumitomo Mitsui Banking Corp. (SMBC) said the Philippine economy is expected to achieve a 6-percent expansion in 2024 despite the slower growth in the first quarter.
“Based on the assumption that consumption will pick up in the second half of the year, I expect the Philippine economy to grow by 6 percent in 2024,” said Ryota Abe, economist at global markets and treasury department-Asia Pacific division at SMBC.
Abe issued the statement after the Philippine Statistics Authority reported that the gross domestic product grew 5.7 percent year-on-year in the first quarter of 2024.
Abe said he also expects the Bangko Sentral ng Pilipinas to ease its monetary policy going forward on the conditions that the US dollar does not strengthen further, the peso-dollar rate falls steadily to below the 58.0 level and inflation slows further.
“In the short term, domestic inflation is likely to face upward pressure mainly due to a rise in imported inflation on the back of a weakening PHP and rising commodity prices. However, it is expected to return to the target range steadily in the second half of the year due to base effect,” he said.
Meanwhile, Oxford Economics said it expects domestic demand in the Philippines to soften this year. It said while exports surprised to the upside, this was driven by the growth in business services exports which tend to be volatile and was unlikely to be sustained.
“Overall, the Q1 GDP print is unlikely to affect our 2024 forecast of 5.2 percent significantly,” the UK-based organization said.
Oxford Economics said private consumption, a main pillar of the economy, slowed to 4.6 percent in the first quarter, reflecting a broad-based weakness across all major spending categories.
Investment growth also slowed to 2.3 percent in the first quarter, and within the private sector, durable equipment investment contracted 4.8 percent.
“We maintain our view that domestic demand will soften this year, while the improvement in the external sector will be a gradual process. The subdued global momentum and mediocre support from the AI boom due to the country’s low value-added activities in the electronics sector will limit export growth,” it said.