THE PHILIPPINE ECONOMY may grow slower than initially expected as rising rates due to stubborn inflation and the peso’s continued depreciation could affect consumption, Moody’s Analytics said on Wednesday. READ
In a note titled “APAC Outlook: The Coming Test of Resilience,” Moody’s Analytics said Philippine gross domestic product is likely to expand by 6.8% this year, slower than the 7.2% forecast it gave in August. Still, this falls within the government’s 6.5-7.5% target for the year.
“However, the biggest risks facing the Philippines are currency weakness and persistent inflation . The BSP will be pressured to move in tandem with the US Federal Reserve to support its currency,” she added.“The June quarter GDP release showed that the economy is slowing and contracted compared to the March quarter,” she said.
On Wednesday, the peso closed at a new record low of P58 per dollar, down by 52 centavos from the previous day, as markets awaited the Fed’s decision overnight. For the Asia-Pacific region, Moody’s Analytics Chief Asia-Pacific Economist Steven Cochrane said the growth outlook has likewise been dampened by rising interest rates to combat accelerating inflation.
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