Citing some factors, the National Economic and Development Authority (NEDA) sees faster gross domestic product (GDP) growth for the Philippine economy in the 2nd half of this year which should result in a full 2024 growth rate of 6% to 7%, according to a BusinessWorld new report.
To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…
PHILIPPINE gross domestic product (GDP) growth in the second semester could be faster than the 6% average in the first half amid easing inflation and lower policy rates, the National Economic and Development Authority (NEDA) said.
“Now, with inflation lower, with policy rates lower, with the labor market continuing to be robust, I think we would see an even better second half than in the first half,” NEDA Secretary Arsenio M. Balisacan told BusinessWorld on the sidelines of a Senate hearing on Wednesday.
In the second quarter, GDP expanded by 6.3%, bringing the first-half growth to 6%.
“We are expecting 6-7% (GDP growth) for the full year, and I think that the likelihood that we’ll achieve that is now very high,” Mr. Balisacan said.
However, even as inflation eased to a seven-month low of 3.3% in August, Mr. Balisacan noted that the economy remains sensitive to inflationary pressures.
Year to date, inflation averaged 3.6%, settling within the 2-4% target range of the Bangko Sentral ng Pilipinas (BSP).
The inflation downtrend has allowed the BSP to begin its easing cycle with its first rate cut in nearly four years last August. The Monetary Board lowered the policy rate by 25 basis points (bps) to 6.25% from the over 17-year high of 6.25% previously.
Mr. Balisacan noted the impact of lower policy rates “is not almost instantaneous.”
Despite this, the Philippine and US central banks’ expected easing path should help boost investment activity and support growth, he said.
“Especially now that the expectations everywhere with the Fed expected to decrease (interest rates)… then, there is now greater stimulus for us to continue lowering the policy rates,” he said. “With the business community hearing that, they are likely to rethink their investment plans.”
BSP Governor Eli M. Remolona, Jr. earlier signaled another 25-bp cut in the fourth quarter. The last two Monetary Board meetings for the year are scheduled on Oct. 17 and Dec. 19.
Meanwhile, GDP growth is expected to settle within the government’s target range this year, but may fall short of the growth goals in the next two years, according to the latest forecasts from the BSP’s Policy Analysis Model for the Philippines.
Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines has enough momentum to achieve GDP growth of 7% for 2024?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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