The Philippine economy is expected to grow above six percent in the second quarter of the year, according to British banking giant HSBC. This growth is attributed to base effects and improved government spending. The tariff reduction for rice is also projected to contribute 1.4 percent to the overall growth for the year.
HSBC’s economist for ASEAN, Aris Dacanay, stated that the country’s GDP growth likely accelerated to above six percent in the second quarter, surpassing the first quarter’s 5.7 percent and the previous year’s 4.3 percent for the same period. If this growth is realized, it will fall within the government’s target range of six to seven percent for 2024.
Dacanay emphasized that the current state of spending, consumption, and investments in the country are supporting this growth. The economy had a slower GDP print in the second quarter of the previous year due to government underspending, but has since rebounded with increased growth in the first quarter.
Moreover, the recently approved tariff reduction for rice could potentially boost economic growth this year. By cutting the tariff rate by 20 percentage points, households could have more disposable income to spend on other items, thereby supporting overall consumption and economic growth.
President Marcos has reduced the tariff for imported rice to 15 percent from 35 percent until 2028, aiming to lower the price of rice to P29 per kilo for the poorest consumers. While this move is expected to benefit consumers, Dacanay pointed out that it could also pose risks to the inflation outlook.
Despite these factors, HSBC’s official growth and inflation forecasts for the year do not currently include the impact of the tariff rate cuts. The bank projects the Philippine economy to grow by 5.8 percent in 2024 and 6.1 percent in 2025, slightly below the government’s targets for those years. Inflation is expected to average 3.6 percent this year before increasing to 3.8 percent in 2025.
