Weak economy feared to spill over into Q3
Manila - The economy of the Philippines might experience a decrease in gross domestic product (GDP) for the second consecutive quarter from July to September, which could lead to a small-scale recession, as stated by Pantheon Macroeconomics.
According to a statement from the UK organization, the Philippine economic performance in the second quarter, as indicated by the GDP report, was a complete catastrophe. This is due to the fact that the reported growth of 4.3 percent was significantly lower than the anticipated 6 percent predicted by experts.
Additionally, during the second quarter, the national economy experienced a 0.9 percent decline in comparison to the first quarter.
Pantheon Macroeconomics predicts that the economy of the Philippines is expected to experience a further decline in strength based on the data from the second quarter.
According to the group, the primary driving force of the economy, which is private consumption, is weakening. It has been experiencing three consecutive years of negative savings, the opposite of last year's excessive borrowing, and below-average growth in remittances.
According to our analysis, we believe that the Philippines is currently experiencing a small-scale economic downturn which we anticipate will persist until the third quarter. As a result, we expect a significant decrease in the country's annual GDP growth, dropping from 7.6 percent in 2022 to 4.5 percent.
According to Pantheon Macroeconomics, there will be a further decline in the economy this quarter. However, they also predict that the Philippines will recover from this decline by the end of the year. They anticipate that the Bangko Sentral ng Pilipinas will lower its policy rate from 6.25 percent during the fourth quarter.
In the meantime, Finance Secretary Benjamin Diokno emphasized that the government's objective of achieving a GDP growth rate of 6 percent to 7 percent for the entirety of 2023 was still reachable.
Diokno mentioned that this objective would be accomplished via an assertive approach of tightening monetary policies, which was initiated in May 2022. As a result, the benchmark interest rate has risen by 4.25 percentage points, after being at an unprecedentedly low level of 2 percent.
The economic experts of the Marcos government are convinced that the effects of tightening policies are already being experienced and will continue to be felt until the following year. Diokno mentioned that reduced inflation would positively impact the private expenditure.
Additionally, he stated that the governing body is putting into action and closely observing tactics to alleviate the escalating costs of food products.
Some of the activities to consider in order to address the shortage in domestic supply include importing enough goods based on the analysis of supply and demand, as well as predictions. Additionally, it is crucial to enhance the implementation of programs that promote biosecurity and the repopulation of hogs. Moreover, it is essential to take measures to tackle the consequences of El Niño.
Diokno has pledged to increase government expenditure. INQ
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