WEATHER disturbances and the flood control mess will slow down economic growth in the third quarter but will likely pick up in the last quarter of the year due to lower inflation rate, more OFW remittances and ‘steady’ export gains despite the Washington-imposed tariffs.
This was according to the University of Asia and the Pacific (UA and P) in its latest Market Call report which stated that economists see a GDP slowdown to a 5.2-percent pace in the third quarter.
‘We project a GDP slowdown to a 5.2 percent pace in Q3 due to more weather disturbances and the popular uproar over the flood control corruption controversy,’ the economists noted.
However, the report noted that economists are expecting faster growth in the last quarter of the year at 5.7 percent given ‘positive signs of recovery.’
‘These include Q4 inflation rates to average at just 1.6 percent, much below BSP targets, employment recovery evident already in August, more robust OFW remittances specially in peso terms [with the peso depreciation], and steady export gains despite the Trump tariffs,’ the Market Call report stated.
As such, economists said full year GDP rate will likely settle at 5.5 percent, the lower end of the government’s projections.
In an interview with reporters last week, Department of Economy, Planning and Development (DEPDev) Secretary Arsenio M. Balisacan told reporters that he sees ‘a bit of a slowdown’ in the economy in the third quarter due to supply shocks such as typhoons and work suspensions.
Balisacan noted that the slowdown in GDP growth is in relation to what the economic team was expecting six months ago.
Still, he is hoping that the economy’s growth rate in the third quarter will not be slower than the 5.4 percent posted in the second quarter.
Like what was stated in the Market Call, Balisacan is pinning his hopes on what he called ‘good developments’ such as ‘Inflation has continued to fall, interest rates have continued to slow down.’
He explained that the effects of falling interest rates in the earlier months are ‘beginning to be felt now,’ adding, ‘There are usually lag effects of interest rate changes and investment and consumption decisions.’
The growth that the country’s economic team is expecting for this year is now at 5.5 to 6.5 percent.
Balisacan said the low end of the range is ‘still very much achievable.’
However, the country’s socioeconomic planning chief said the setbacks caused by corruption allegations hounding flood control projects and other public infrastructure projects are temporary and will not derail the Philippines’s bid to achieve higher growth.
‘We believe that the setbacks are very temporary. I like that this happened because then we can do something about these issues so that the medium-term and long-term prospects of the economy will be even stronger,’ Balisacan said last week.