Maintains 6.3% GDP outlook, cuts inflation forecast
THE research arm of Metropolitan Bank and Trust Company (Metrobank) remains optimistic about the country’s growth and inflation outlook for this year despite a projected slower growth in the second half.
In its third quarter 2016 outlook and forecasts, Metrobank Research said full year gross domestic product (GDP) growth is seen at 6.3 percent while headline inflation is expected to ease to 1.8 percent from its earlier projection of 2 percent.
“Risks to domestic economy remain amid the effects of the still uneven global economic growth and impact of financial market volatilities. For now, Research is keeping its 6.3 percent GDP full year forecast for 2016,” Metrobank Research said.
It said consumption spending will remain robust in the second half on the back of still soft commodity prices, but will not perform as the first half as the election spending boost wears off.
“Research expects the growth for the second half to be lower than the first half as the boost from election spending fades and base effects from strong growth in the third and fourth quarters of 2015 kick in,” Metrobank Research said.
The Philippine economy grew by 6.9 percent and 7 percent in the first and second quarters of this year, respectively, compared to a year ago, leading to average growth of 6.9 percent in the first half of 2016.
The Duterte administration is targeting growth of 6 percent to 7 percent in 2016, 6.5 percent to 7.5 percent in 2017, and 7 percent to 8 percent a year toward 2022.
Metrobank Research said it downgraded its headline inflation outlook to 1.8 percent from 2 percent previously because “push and pull factors will continue to influence average inflation this year.”
It added: “Possible upside risks may come from base effects and the expected impact of unfavorable weather conditions. Food prices, most especially, are slowly picking up amid the impact of El Niño phenomenon in the first half. The downward pressure would however stem from still soft global commodity prices.”
The central bank also earlier cut its 2016 inflation forecast to 1.7 percent from It also targets 2017 inflation to reach 2.9 percent, easing to 2.6 percent in 2018, which is within its general outlook range of 2 percent to 4 percent for 2017 and 2018.