Anticipated Increase in GDP Growth Rate for 2nd Quarter

The Philippines is expected to see a growth in its gross domestic product (GDP) to 5.9 percent in the second quarter, up from 5.7 percent in the first quarter. This projection comes from First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P), who anticipate factors such as high employment, government spending, and stable inflation to contribute to this acceleration.

FMIC and UA&P also maintained their forecast of six percent GDP growth for the full year of 2024, aligning with the government’s target range. Despite a slower than expected growth in the first quarter, the institutions believe that strong domestic demand, supported by increased employment levels and government expenditures, will drive the economy forward in the coming months.

In terms of inflation, FMIC and UA&P predict a slight increase in the second quarter to 3.9 percent, largely due to base effects. However, they anticipate inflation to trend closer to three percent by August and for the remainder of the year as crude oil prices stabilize below $80 per barrel.

Looking ahead, the institutions expect the Bangko Sentral ng Pilipinas (BSP) to reduce interest rates by 25 basis points in the third quarter. This adjustment would come after the BSP maintained the key interest rate at 6.50 percent, the highest in 17 years, during their last policy meeting.

As for exports, FMIC and UA&P anticipate a modest growth of less than 10 percent for the full year of 2024, as global economic recovery remains uncertain. In 2023, the country’s merchandise exports declined by 4.1 percent, but there was a 4.8 percent increase in the January to March period of 2024 compared to the same period in 2023.

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