In the view of the University of Asia and the Pacific (UA&P), the growth of the economy of the Philippines may slow down a bit further this year to 4.2%, according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from report of the BusinessWorld. Some parts in boldface…
PHILIPPINE ECONOMIC growth may likely be even slower this year, amid uncertainty over a “meaningful” recovery, the University of Asia and the Pacific (UA&P) said.
In its February The Market Call, UA&P cut its full-year gross domestic product (GDP) growth forecast to 4.2% from the “above 5%” forecast previously.
If realized, this will be even slower than the post-pandemic low of 4.4% GDP growth in 2025 when the flood control scandal dampened government spending and investments.
However, UA&P expects first-quarter GDP growth to pick up to 3.3% from 3% in the fourth quarter of 2025. If realized, it will be slower than 5.4% in the first quarter of 2025.
“More indicators revealed the impact of the flood control scandal, hurting economic growth in 2025 as sentiment points to a ‘muddling through’ scenario for 2026,” it said. UA&P said the government needs to ramp up spending to drive faster growth this year.
“While uncertainty over a meaningful economic recovery remains, we see some bits of light emerging,” it said.
“With inflation remaining in the lowest quarter of BSP (Bangko Sentral ng Pilipinas) target range, policy and interest rates declining, and the peso depreciating, consumer spending, residential property sales, car sales, equipment leasing and other interest-sensitive spending should provide better consumption expenditures in Q1,” it added.
Headline inflation picked up to 2% in January from 1.8% in December and 2.9% in the same month last year.
“A more optimistic PMI in January, along with expected increases in exports and remittances from overseas Filipinos, should be supported by the peso’s depreciation,” UA&P said.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to a nine-month high of 52.9 in January due to fresh export orders.
Last year, merchandise exports reached $84.4 billion, reflecting a 15.2% increase amid “holiday demand, US agricultural exemptions, and a weaker peso.”
Cash remittances coursed through banks hit an all-time high in December at $3.5 billion, bringing the full-year tally to a record $35.6 billion.
Meanwhile, the UA&P said that it expects further weakening of the peso after the BSP cut its policy rate by 25 basis points (bps) in February.
The Monetary Board lowered the target reverse repurchase rate by 25 bps to 4.25%, the lowest in over three years. This brought the BSP’s total reductions to 225 bps since it began monetary policy easing in August 2024.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you find the latest economic outlook of UA&P believable and precise? Do you think the fallout from the flood control corruption scandal still is dragging down the economic growth of the nation? Do you think the national government will be able to increase its spending this year?
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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