MOODY鈥檚 Analytics raised its growth projection for the Philippines to 6.1% this year from 5.7% previously, after identifying the country as a 鈥済rowth leader鈥 in the region.
Moody鈥檚 updated its previous estimate issued in March and aligned its view with the government鈥檚 official 6-7% full-year target.
In a research note on Tuesday, Moody鈥檚 Analytics Chief Asia-Pacific Economist Steven Cochrane said the region鈥檚 growth for 2023 and 2024 will outpace Europe and North America.
鈥淟eaders of growth this year will be the Philippines, India, China and Indonesia,鈥 he said.
鈥淎ll four will continue to benefit this year from targeted fiscal support that will add to near-term growth. The Philippines and Indonesia both have substantial infrastructure construction programs to improve badly needed highways and transport services,鈥 he added.
The government hopes to spend 5.3% of GDP or around P1.29 trillion on infrastructure this year.
For 2024, Moody鈥檚 expects growth to ease to 5.4%, lower than its earlier 6% forecast. This is below the government鈥檚 6.5-8% target for next year.
Meanwhile, Moody鈥檚 sees inflation settling at 5.9% this year, against the 6.8% forecast it issued in March.聽It also maintained its inflation forecast at 2.9% for next year.
Mr. Cochrane said inflation remains high in the region, but has begun to ease since the start of the year.
鈥淭he Philippines, India, South Korea, Australia and New Zealand were among those with the highest inflation rates in the second half of last year. All have now eased downward but most are still above central bank target rates,鈥 he said.
In the Philippines, headline inflation eased to 6.1% in May 鈥 the lowest level in a year. Still, it was the 14th straight month that inflation breached the central bank鈥檚 2-4% goal.
Inflation has averaged 7.5% this year, higher than the revised 5.5% forecast by the central bank.
鈥淭hus, monetary policy is expected to remain tight through the end of this year in much of the region, with some easing in policy rates early in 2024,鈥 Mr. Cochrane added.
The Bangko Sentral ng Pilipinas paused its monetary policy tightening cycle last month. The Monetary Board has raised key rates by 425 basis points to 6.25% since May 2022.
The Monetary Board is next scheduled to meet on June 22. 鈥 Keisha B. Ta-asan
