PHILIPPINE ECONOMIC growth may likely be even slower this 12 months, amid uncertainty over a “meaningful” recovery, the University of Asia and the Pacific (UA&P) said.
In its February The Market Call, UA&P cut its full-year gross domestic product (GDP) growth forecast to 4.2% from the “above 5%” forecast previously.
If realized, this might be even slower than the post-pandemic low of 4.4% GDP growth in 2025 when the flood control scandal dampened government spending and investments.
Nonetheless, UA&P expects first-quarter GDP growth to select as much as 3.3% from 3% within the fourth quarter of 2025. If realized, it would be slower than 5.4% in the primary quarter of 2025.
“More indicators revealed the impact of the flood control scandal, hurting economic growth in 2025 as sentiment points to a ‘muddling through’ scenario for 2026,” it said.
UA&P said the federal government must ramp up spending to drive faster growth this 12 months.
“While uncertainty over a meaningful economic recovery stays, we see some bits of sunshine emerging,” it said.
“With inflation remaining in the bottom quarter of BSP (Bangko Sentral ng Pilipinas) goal range, policy and rates of interest declining, and the peso depreciating, consumer spending, residential property sales, automotive sales, equipment leasing and other interest-sensitive spending should provide higher consumption expenditures in Q1,” it added.
Headline inflation picked as much as 2% in January from 1.8% in December and a couple of.9% in the identical month last 12 months.
“A more optimistic PMI in January, together with expected increases in exports and remittances from overseas Filipinos, needs to be supported by the peso’s depreciation,” UA&P said.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to a nine-month high of 52.9 in January as a consequence of fresh export orders.
Last 12 months, merchandise exports reached $84.4 billion, reflecting a 15.2% increase amid “holiday demand, US agricultural exemptions, and a weaker peso.”
Money remittances coursed through banks hit an all-time high in December at $3.5 billion, bringing the full-year tally to a record $35.6 billion.
Meanwhile, the UA&P said that it expects further weakening of the peso after the BSP cut its policy rate by 25 basis points (bps) in February.
The Monetary Board lowered the goal reverse repurchase rate by 25 bps to 4.25%, the bottom in over three years. This brought the BSP’s total reductions to 225 bps because it began monetary policy easing in August 2024.
OIL PRICES
Meanwhile, National Statistician Claire Dennis S. Mapa said that he expects oil prices to stay a top risk for inflation in February.
“One possible risk for February is the value of oil because every week the value of oil increases,” he told reporters on the sidelines of an event on Wednesday.
“But I actually have to have a look at the info, but I got reports that there are weekly increases… so we’ve got to see if those increases, the overall increase, are higher than the identical period last 12 months,” he added.
Pump prices on Tuesday jumped for an eighth straight week as global crude oil prices continued to rise amid persistent volatility in the worldwide oil market, driven by escalating geopolitical tensions.
Fuel retailers raised gasoline prices by P0.60 per liter, diesel by P1.20 per liter, and kerosene by P1.20 per liter.
Normally, Mr. Mapa said that the BSP expects inflation to be higher in comparison with 2025, as there are “base effects that we’re considering.”
“If there aren’t any interruptions within the second half, meaning there aren’t any typhoons, often the primary half prices of commodities will carry over to the second half,” he added.
The BSP expects inflation to average 3.6% this 12 months, faster than the nine-year low of 1.7% in 2025. — Justine Irish D. Tabile