Philippines may post above 4% growth in Q4 – UA&P
The Philippine economy may grow above four percent in the fourth quarter, supported by a rebound in infrastructure spending and stronger demand, according to the University of Asia and the Pacific.
MANILA, Philippines — The Philippine economy could achieve growth above 4% in the fourth quarter, according to the University of Asia and the Pacific (UA&P). The institution cites a rebound in infrastructure spending and stronger demand as key factors behind this forecast. UA&P acknowledges the tepid growth seen in the third quarter, similar to the 2.3% gain in the second quarter, which was impacted by August's flooding and delayed infrastructure spending.
However, they highlight positive signs such as record employment figures, strong export performance, and overseas Filipino workers' remittances in June. These factors, coupled with a significant increase in infrastructure spending in the fourth quarter, are expected to propel the economy back onto a growth trajectory above 4%. UA&P also anticipates a further acceleration in growth in 2027, driven by the resumption of government infrastructure spending, reduced crude oil prices, and improved demand conditions.
The government's target for 2027 is an adjusted growth rate of 5 to 6%. While June's record employment of 50.8 million workers provided a boost, UA&P expects this growth rate to slow down as the recent minimum wage increase in the National Capital Region raises labor costs and reduces firms' hiring intentions. Additionally, they suggest that challenges like the uncertain Middle East negotiation procedures, agricultural damage from heavy rains, and a possible strong El Niño could keep inflation above target until 2027.
Inflation has been moderating, decreasing to 6.1% in August from 6.2% in July. Responding to the Bangko Sentral ng Pilipinas' (BSP) decision to raise rates by 25 basis points to 5% at their most recent meeting, UA&P anticipates another 25-basis-point increase throughout the year. For remittances, UA&P predicts low single-digit growth for the rest of the year.
With lingering high host-country inflation and Middle East deployment complications, annual inflows could face downside risks relative to the BSP's full-year cash remittance growth target of 2.7 percent, which translates to $36.6 billion. Lastly, the local currency outlook indicates that short-term pressures from oil price volatility and trade deficits may cause the peso to trade at 63 per dollar.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
