Home Politics Philippines GDP growth beats forecasts | Business and Economy

Philippines GDP growth beats forecasts | Business and Economy

by YAR

The Southeast Asian country’s gross domestic product expands 8.3 percent in the first quarter.

The Philippine economy grew faster than expected in the first quarter, fueling expectations of interest rate hikes to curb rising inflation, a key challenge facing the country’s newly elected president.

The Southeast Asian country’s gross domestic product (GDP) grew 8.3 percent during the January-March period compared with a year earlier, well above forecasts and faster than the 7.7 percent expansion. in the previous quarter.

The expansion marked the fastest increase since the June quarter of 2021, when growth hit 12.1 percent.

Bangko Sentral ng Pilipinas (BSP), the country’s central bank, holds its next policy meeting on May 19 amid growing expectations of an interest rate hike to rein in rising prices that could threaten the recovery. economical if left unchecked.

“This robust economic recovery, coupled with above-target inflation, points to a normalization of Bangko Sentral ng Pilipinas policies,” Nicholas Mapa, senior Philippines economist at ING, said in a note.

“Philippines BSP Governor Diokno has kept rates unchanged to help support the economic recovery. But with GDP now back to pre-Covid levels and with inflation accelerating, we expect the BSP to raise policy rates at the May 19 meeting next week.”

Ferdinand Marcos Jr, son of the late dictator Ferdinand Marcos, will take office in June after the end of Rodrigo Duterte’s only 6-year term, following a landslide election victory on Wednesday.

Marcos, a polarizing political figure due to his father’s 20-year repressive rule, has been widely seen by investors as lacking a clear economic agenda.

“President-elect Ferdinand Marcos Jr faces a difficult balancing act between supporting the economic recovery and containing the Philippines’ growing fiscal deficit,” Oxford Economics economists Makoto Tsuchiya and Sian Fenner said in a note on Wednesday.

“Based on the latest budget, we expect it to average 8 percent of GDP this year, down only modestly from 8.5 percent in 2021 amid some improvement in revenues thanks to stronger domestic demand. However, Marcos Jr’s fiscal agenda is unclear. It is possible that he is leaning towards further fiscal expansion, which could lead to credit rating downgrades and increased risk aversion for Philippine assets.”

Mapa, the ING economist, said Marcos’ strong mandate could open the door to “substantial economic reforms.”

“The investment community now awaits Marcos’ cabinet selections, in particular the composition of his economic team and his plans for how to address key issues such as accelerating inflation and debt consolidation: Marcos inherits a sizeable amount of debt of his predecessor,” he said. .

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