THE PHILIPPINE ECONOMY is expected to hit the government’s growth target this year, but the central bank sees slower expansion through 2024 due to the impact of high interest rates.
In its latest monetary policy report, the Bangko Sentral ng Pilipinas said gross domestic product growth will be likely within the 6.5-7.5% target of the Development Budget Coordination Committee .
Since May, the Monetary Board has raised policy rates by 300 bps to curb inflation and support the peso. The implementation of the Corporate Recovery and Tax Incentives for Enterprises law, Financial Institutions Strategic Transfer Act, and the second tranche in the reduction in personal income taxes will further boost the domestic outlook in 2023 and 2024, the BSP said.“Estimates from the BSP’s Policy Analysis Model for the Philippines 4 indicate that the output gap is projected to turn positive in 2023, reecting largely the sustained expansion in 2022.
“The projected deceleration of the inflation path can be attributed to the easing global oil and non-oil prices and negative base effects from transport fare adjustments in 2022 as well as the impact of BSP’s cumulative policy rate adjustments.”ation projection to 5.8% this year, from 5.4% previously. It also hiked the in“However, high ination in November to hit 7.8% or even higher, with upside risks still largely from food,” China Banking Corp. Chief Economist Domini S. Velasquez said.
Security Bank Corp. Chief Economist Robert Dan J. Roces said the growth outturn in the third quarter points to a “comfortable space” to do more rate hikes.
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