THE “elevated” prices of goods and services will dent the country’s economic performance in the second quarter, slowing it down further to 5.8 percent, the lowest in nine quarters, a local think tank said.
The First Metro Investment Corporation-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research projected that the Philippines’s second quarter economic performance would be slower than the 6.4-percent GDP growth it posted in the first quarter.
“GDP growth may slow mildly to 5.8 [percent] [year-on-year] in [the second quarter] as elevated inflation constrains consumer spending,” the think tank said in its latest Market Call report released on Tuesday.
The first-quarter GDP growth of the Philippine economy was the lowest in the past eight quarters or since the second quarter of 2021, based on historical data from the Philippine Statistics Authority.
Nonetheless, FMIC-UA&P Capital Market Research pointed out that it expects “strong gains” in construction sector due to “accelerating” infrastructure work as well as in the services sector due to revenge spending by Filipinos on transport, food, and accommodation.
“With these gaining further traction in [second half] and sharply lower inflation rates to average 3.3 percent by [fourth quarter], we see a return to above-6 percent full-year growth in 2023,”
FMIC-UA&P Capital Market said the 6 percent or higher
full-year GDP growth of the Philippines this year will be supported by government’s infrastructure spending, especially on big-ticket projects coupled with revenge spending in domestic and foreign tourism.
The local think tank has also revised “downward” its inflation forecasts for second quarter to 6.3 percent and for the third quarter to 5.1 percent as government’s supply response to higher food prices is “gaining traction” amid weakening crude oil prices due to global economic slowdown.
“Headline inflation will likely continue to fall, averaging 6.3 percent in [second quarter] when it breaks through the 6 [percent] floor by June and we expect this to average 3.3 [percent] in [fourth quarter], well within the BSP’s target range of 2 [percent] to 4 [percent],” FMIC-UA&P Capital Market said.
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