{"id":8760,"date":"2025-02-20T00:02:27","date_gmt":"2025-02-19T23:02:27","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=8760"},"modified":"2025-02-20T00:02:27","modified_gmt":"2025-02-19T23:02:27","slug":"inflation-remains-the-primary-threat-to-philippine-economic-growth","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/02\/20\/inflation-remains-the-primary-threat-to-philippine-economic-growth\/","title":{"rendered":"Inflation Remains the Primary Threat to Philippine Economic Growth"},"content":{"rendered":"\n<p class=\"p2\"><span class=\"s3\">A REACCELERATION of inflation is <\/span><span class=\"s4\">still the most prominent obstacle to the Philippines\u2019 economic forecast this year, which may present a threat to the central bank\u2019s easing cycle, a Moody\u2019s Analytics economist stated.<\/span><\/p>\n<p class=\"p3\">\u201cThe uptick in inflation poses the greatest danger for the Philippine economy and these originate from both local and international contributors,\u201d Moody\u2019s Analytics economist Sarah Tan remarked in an interview on <i>Money Talks with Cathy Yang<\/i> on One News on Wednesday.<\/p>\n<p class=\"p3\">\u201cOn the domestic front, I believe the concern is that food inflation continues to remain high due to recurrent weather disturbances that could negatively impact local supply,\u201d she noted.<\/p>\n<p class=\"p3\"><span class=\"s3\">In January, inflation held steady at 2.9% although food inflation surged to 4% from 3.5% in December.<\/span><\/p>\n<p class=\"p3\">Numerous storms struck the nation late last year, resulting in agricultural damages amounting to billions of pesos.<\/p>\n<p class=\"p3\">\u201cFrom an external standpoint, I think we fear that the tariffs enacted by the US could trigger a rise in global inflation due to interruptions in supply-chain networks,\u201d Ms. Tan stated.<\/p>\n<p class=\"p3\">However, she indicated that the effect of US President Donald J. Trump\u2019s restrictive trade measures on the Philippines is likely to be negligible.<\/p>\n<p class=\"p3\"><span class=\"s3\">\u201cWhen we take a step back and evaluate the trade relations between the Philippines and the US, it is evident that the Philippines\u2019 trade deficit with the US is quite minor, particularly in comparison with other economies, both globally and within ASEAN (Association of Southeast Asian Nations) economies.\u201d <\/span><\/p>\n<p class=\"p3\">\u201cThis essentially implies that the Philippines is improbable to rank high on President Trump\u2019s agenda,\u201d she added.<\/p>\n<p class=\"p3\"><span class=\"s5\">Since assuming office in January, Mr. Trump has already imposed a 10% tariff on Chinese products along with duties on all steel and aluminum imports starting in March. <\/span><\/p>\n<p class=\"p3\">Conversely, Mr. Trump\u2019s proposal to impose reciprocal tariffs on all nations that impose duties on US imports may have a deeper impact on the Philippines.<\/p>\n<p class=\"p3\">\u201cIf a blanket reciprocal tariff is implemented by the US, it will adversely affect the Philippines because the duties imposed on US imports into the Philippines are higher compared to the reverse,\u201d she pointed out.<\/p>\n<p class=\"p3\"><span class=\"s3\">\u201cIf tariffs are reciprocated, then it will make Philippine products to the US more expensive and less competitive, which ultimately would be detrimental to our Filipino manufacturers and exporters.\u201d <\/span><\/p>\n<p class=\"p3\">The US generally serves as the primary market for Philippine-made products. In 2024, exports to the US were valued at $12.12 billion or 16.6% of total export revenue.<\/p>\n<p class=\"p3\">\u201cI believe the effect on the Philippines is fairly minimal given the low trade exposure to the US. Nevertheless, there are indirect channels of influence on the Philippines,\u201d Ms. Tan added.<\/p>\n<p class=\"p4\"><b>RISKS TO EASING<br \/>\n<\/b>Inflationary pressures stemming from these risks could compel the Bangko Sentral ng Pilipinas (BSP) to exercise greater caution regarding further easing, Ms. Tan asserted.<\/p>\n<p class=\"p3\">\u201cShould inflation begin to accelerate beyond the BSP\u2019s objectives, that could postpone the timing and extent of potential policy easing in the Philippines,\u201d she stated.<\/p>\n<p class=\"p3\"><span class=\"s6\">\u201cIf that turns out to be the case, then maintaining higher borrowing costs and prolonged inflation will create a situation conducive to further weakening in private consumption, which is not favorable for the economy, especially considering it serves as the main growth driver.\u201d <\/span><\/p>\n<p class=\"p3\">The BSP surprised the markets when it kept the benchmark unchanged at 5.75% during its February 13 meeting, following a series of rate cuts over three consecutive meetings since initiating its easing cycle in August.<\/p>\n<p class=\"p3\">Ms. Tan was the sole economist in a <i>BusinessWorld<\/i> poll of 20 analysts who accurately anticipated the hold.<\/p>\n<p class=\"p3\">\u201cIt is a delicate balancing act that the BSP is performing. They must weigh both inflationary risks against the strength of the peso.\u201d<\/p>\n<p class=\"p3\"><span class=\"s7\">\u201cThat being said, we don\u2019t foresee the hold lasting for an extended period. In fact, the next rate cut might occur as soon as April, during the next Monetary Board meeting,\u201d she remarked.<\/span><\/p>\n<p class=\"p3\">Notwithstanding the pause, BSP Governor Eli M. Remolona, Jr. mentioned that a rate cut remains a possibility at the Monetary Board\u2019s upcoming rate-setting meeting on April 3.<\/p>\n<p class=\"p3\">He also indicated that the central bank remains on an easing trajectory, hinting at the potential for up to 50 basis points (bps) in cuts this year.<\/p>\n<p class=\"p3\">\u201cWith inflation largely back on target, and GDP (gross domestic product) growth still slightly beneath the government&#8217;s expectations, these factors may lead to a cut in rates sooner rather than later,\u201d Ms. Tan noted.<\/p>\n<p class=\"p3\">The Philippines\u2019 GDP grew by a slower-than-expected 5.2% in the fourth quarter. This brought the full-year growth rate for 2024 to 5.6%, falling short of the government&#8217;s target of 6-6.5%.<\/p>\n<p class=\"p3\">Meanwhile, Ms. Tan indicated that the forthcoming midterm elections in May could stimulate spending.<\/p>\n<p class=\"p3\">\u201cGenerally, elections, whether national or midterm, tend to provide a boost to the economy, particularly through the consumption channel.\u201d<\/p>\n<p class=\"p3\">\u201cTherefore, we will observe an increase in spending on goods and services related to campaigns. However, simultaneously, all that heightened demand may also signal negative implications for inflation,\u201d she added. \u2014 <b>Luisa Maria Jacinta C. Jocson<\/b><\/p>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.bworldonline.com\/top-stories\/2025\/02\/20\/654428\/inflation-still-top-risk-to-phl-growth\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A REACCELERATION of inflation is still the most prominent obstacle to the Philippines\u2019 economic forecast this year, which may present a threat to the central bank\u2019s easing cycle, a Moody\u2019s Analytics economist stated. \u201cThe uptick in inflation poses the greatest danger for the Philippine economy and these originate from both local and international contributors,\u201d Moody\u2019s<\/p>\n","protected":false},"author":3,"featured_media":8761,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[1361],"class_list":["post-8760","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy-and-markets","tag-return-a-list-of-comma-separated-tags-from-this-title-inflation-still-top-risk-to-phl-growth"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.3 - 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