Maybank Investment Banking Group slashed its growth forecast for the Philippines this year, amid the increasing possibility of a recession in the United States, China, and the European Union (EU).

Maybank on Tuesday said it lowered the gross domestic product (GDP) growth forecast for the Philippines to 6.5% this year, from the 7% projection it gave in January. The latest forecast is still within the government’s 6.5-7.5% target for the year, and faster than the 5.7% expansion in 2021.

Despite the downgrade, Maybank said the Philippine GDP growth will be the second fastest among the Association of Southeast Asian Nations (ASEAN) member countries for this year, after Vietnam’s 6.9%.

Maybank also lowered its 2022 growth projection for ASEAN-6 to 5%, from 5.4% previously.

For 2023, the Philippines is expected to grow by 6.2%, slightly below the government’s target of 6.5-8%. This is also higher than the average 4.6% GDP growth for ASEAN-6 expected in 2023.

INFLATION

Meanwhile, Maybank raised its average inflation forecast for the Philippines to 5.3%, from the projection of 2.8% given in January, as it expects inflation to peak in the third quarter.

Inflation rose to a near four-year high of 6.1% in June, the third straight month it settled above the BSP’s 2-4% target band. Year to date, inflation stood at 4.4%, still below the BSP’s 5% average inflation forecast.

If realized, inflation in the Philippines will be the third highest in the ASEAN region, next to 6.3% for Thailand and 5.5% for Singapore.

Maybank said it expects Philippine inflation to ease to 3.9% in 2023, although this will still be second highest in the ASEAN after Malaysia’s 4.1%.

It noted food inflation in ASEAN stood at 6.5% in June, still modest compared with the European Union (10%) and the US (9.7%).

The Philippines, a net importer of food, remains below the average at 6%.

Also, Maybank said the BSP will be the most aggressive central bank in the ASEAN region as it is expected to increase its benchmark interest rates to a total of 200 basis points (bps) by yearend.

The BSP has increased its benchmark interest rates by a total of 125 bps so far this year. The Monetary Board is expected to raise rates again at its next meeting on Aug. 18.

Source: Businessworld, 03 August 2022
https://www.bworldonline.com/top-stories/2022/08/03/465642/phl-economy-seen-to-expand-6-5-this-year/