Growth is geared to continue at 6 percent the rest of the year as manageable inflation and geopolitical risks encourage investments and consumer spending, Security Bank chief economist Angelo Taningco told Daily Tribune.
“Foreign investors are now back in the Philippine market. The economy already grew by 6 percent in the first half of the year and we think that will be sustained,” he said in an interview in Daily Tribune’s online show Straight Talk on Wednesday.
Taningco said investors and consumers have remained financially flexible as the Bangko Sentral ng Pilipinas managed to keep inflation generally low within its target of 2 to 4 percent due to its reasonably high policy rate to private lenders.
Inflation only briefly spiked to 4.4 percent in July on higher prices of food, utilities, and transport, data from the Philippine Statistics Authority showed.
Last month, overall prices dropped to 1.9 percent from 3.3 percent in August as oil and food prices declined.
Taningco said inflows of investments and robust household consumption will continue as BSP Governor Eli Remolona Jr. projects “manageable” and “well-anchored” inflation expectations amid reignited geopolitical tensions between Israel and Iran, and ongoing Russia-Ukraine war.
Frictions contained
“In the case of the Russia and Ukraine war, we think that it has been a bit contained. We’ve seen commodity prices back to normal levels,” Taningco shared.
“For the Middle East, Israel retaliated against Iran but the markets see it as well targeted. That’s why global oil prices fell to about $71 per barrel; before it was above $80 per barrel. So, the attacks didn’t spark so much fear,” the economist added.
Moving into 2025, Taningco said economic growth could remain high as Filipinos find more job opportunities and the government raises spending.
“For next year, with mid-term elections spending, interest rates going down and inflation remaining manageable, we think that will help investment and consumer spending and create more jobs,” he said.
Political candidates for senators and local government positions have started deploying campaign materials, attending more public events, and boasting their projects as Filipinos are expected to vote on 12 May.
Slow but possible
Given various global risks, Taningco said an 8 percent economic growth in reducing the country’s poverty rate to 9 percent or lower is “possible” but will take time to achieve.
“Given this still uncertain environment, it’s less likely soon. If interest rate continues to decline and inflation remains controlled and geopolitical risks and US elections risks finally subside, I think the chances of hitting Philippine economic growth at 8 percent will increase,” he said.
According to election surveys posted yesterday by the New York Times, conservative Democratic Party’s bet and current vice president Kamala Harris was leading by only 1 percentage point against Republican Party’s and former president Donald Trump.
As a trade protectionist, government leaders worry that a Trump victory would mean higher tariffs on numerous imported goods and less friendly policies against immigrants.
On the other hand, Harris is seen to continue Democrats’ collective efforts on economic growth and wider partnerships on investments, which Taningco said will mostly include clean energy and electronics.