<\/p>\n
By Justine Irish D. Tabile, <\/b>Senior Reporter<\/i><\/p>\n
THE PHILIPPINE ECONOMY <\/span>could grow by around 5% within the second half of the 12 months, driven by base <\/span>effects and an expected acceleration in government infrastructure <\/span>spending, in line with the University of Asia and the Pacific (UA&P).<\/span><\/p>\n \u201cGrowth could get well to around 5% within the second half on base effects and a ramp-up in National Government infrastructure spending,\u201d UA&P said in its The Market Call report this month.<\/span><\/p>\n Government of<\/span>f<\/span>icials earlier signaled a pickup in disbursements and project implementation as agencies <\/span>roll out catch-up programs.<\/span><\/p>\n UA&P cautioned, nonetheless, that growth will remain subdued in the primary half amid unresolved issues surrounding last 12 months\u2019s flood control scandal and elevat<\/span>ed oil prices.<\/p>\n \u201cWeak gross domestic product growth and faster inflation will <\/span>weigh on the economy in the primary <\/span>half amid the unresolved flood control scandal and high oil prices from <\/span>the Middle East conflict,\u201d it said.<\/p>\n \u201cFlip-flopping US-Iran talks may keep fuel prices elevated, hitting the Philippines harder than its ASEAN (Association of Southeast Asian Nations) peers,\u201d it added.<\/span><\/p>\n The Philippine economy expanded by a slower-than-expected 2.8% in the primary quarter. This was below the federal government\u2019s goal range of 5-6% for the 12 months.<\/p>\n For the whole 12 months of 2026, UA&P said growth will likely be slow \u201cbut pose some resilience within the face of near-term global and native headwinds that may likely moderate activity in the primary half of the 12 months.\u201d<\/span><\/p>\n \u201cWhile cautious business sentiment and lingering geopolitical uncertainties may weigh on household and investment spending, the domestic economy continues to profit from strong structural drivers corresponding to regular household consumption, a healthy labor market, and sustained <\/span>remittance inflows,\u201d it added.<\/span><\/p>\n Meanwhile, UA&P said that it expects inflation to speed up further amid second-round effects from the oil shock, \u201cbut likely to not (reach) double digits 12 months on 12 months.\u201d<\/span><\/p>\n Inflation accelerated to 7.2% in April, marking the second consecutive month that it settled above the Bangko Sentral ng Pilipinas\u2019 (BSP) 2%-4% goal. It also breached the BSP\u2019s 5.6%-6.4% forecast for the month.<\/p>\n \u201cThe BSP took on a more hawkish tone due to above-estimate inflation, raising rates and its inflation <\/span>forecast to six.3% for 2026,\u201d it said. <\/span><\/p>\n \u201cWe likewise see above-target inflation for the remaining of 2026, with the potential of double-digit inflation rates as a consequence of base and second-round effects creeping into <\/span>succeeding readings,\u201d it added.<\/span><\/p>\n As inflation is predicted to settle above the goal for the remaining of the 12 months, UA&P expects the BSP to further tighten.<\/p>\n \u201cOur outlook pencils in 75 basis points (bps) more of rate hikes for this 12 months, bringing the policy rate to five.25%, especially because the April inflation reading trumped even the BSP\u2019s upper inflation sure,\u201d it said. <\/span><\/p>\n The central bank last month raised rates for the primary time in nearly two years by 25 bps to 4.5%, with BSP Governor Eli M. Remolona, Jr. saying the Monetary Board stays open to extending the tightening cycle to anchor inflation expectations.<\/p>\n NO STAGFLATION \u201cDespite inflation negative commentary from some analysts, the Philippine economy is just not in stagflation mode,\u201d it said.<\/p>\n \u201cInflation, while elevated, will continually trek downwards after a peace deal gets signed, and growth will return when infrastructure spending resumes together with consumer and business confidence,\u201d it added.<\/p>\n Meanwhile, the peso stays under pressure as crude oil prices surge.<\/span><\/p>\n \u201cThe peso-dollar rate remained under pressure amid the rebound in crude oil prices (i.e., near $100\/barrel for West Texas Intermediate, and $110\/barrel for Brent) in April,\u201d it said.<\/p>\n On Tuesday, the local currency closed P61.56 versus the greenback, weakening by 9.5 centavos from its P61.465 finish on Monday.\u00a0<\/span><\/p>\n UA&P said it expects bonds with longer tenors to deliver higher returns amid elevated rates of interest, after investors cautiously returned <\/span>to the local bond market in April.\u00a0<\/span><\/p>\n Real 10-year yields showed only a 0.9% return based on the sooner 6.2% inflation forecast of the BSP, just half of the 1.8% 10-year average over the past decade.<\/p>\n \u201cThat will fall further once BSP updates its inflation forecast to above 6.5% for 2026,\u201d it said.<\/p>\n Smaller yield gains are expected for shorter-dated papers as banks deploy excess liquidity to earn a minimum of some returns.<\/p>\n \u201cNevertheless, they could come too far behind with likely BSP policy rate (presently at 4.5%) hikes, which we expect will total 75 bps for the remaining of the 12 months,\u201d it added.<\/p>\n<\/p><\/div>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Shoppers buy clothes at a stall in a mall in Mandaluyong City. \u2014 PHILIPPINE STAR\/ RYAN BALDEMOR By Justine Irish D. Tabile, Senior Reporter THE PHILIPPINE ECONOMY could grow by around 5% within the second half of the 12 months, driven by base effects and an expected acceleration in government infrastructure spending, in line with […]<\/p>\n","protected":false},"author":1,"featured_media":341776,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[5456,4136,1901,12560],"class_list":["post-341775","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-economy","tag-expected","tag-philippine","tag-rebound"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/341775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/comments?post=341775"}],"version-history":[{"count":2,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/341775\/revisions"}],"predecessor-version":[{"id":341778,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/341775\/revisions\/341778"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/media\/341776"}],"wp:attachment":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/media?parent=341775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/categories?post=341775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/tags?post=341775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/b>Despite weaker growth and high inflation, UA&P said the country is just not experiencing stagflation.<\/p>\n