Economy to slow this year – HSBC
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 16 Jan 2019 16:14:42 +0000
HSBC believes the Philippine economy will grow at a much slower pace this year on the back of still weak exports and cautious private investments.
Gross domestic product (GDP) growth is expected to moderate to 6 percent this year from an estimated 6.2 percent in 2018, said Cheuk Wan Fan, HSBC Private Banking managing director and chief market strategist for Asia, in a briefing on Wednesday.
The government is targeting growth of 7.0-8.0 percent for 2019.
GDP growth is currently running below the 6.5-6.9 goal for 2018 based on latest data, averaging 6.3 percent as of end-September following first to third quarter outturns of 6.6 percent, 6.2 percent and 6.1 percent, respectively.
Fourth quarter and full-year 2018 GDP figures are set to be released on January 24.
Growth in 2017 was 6.7 percent, near the lower end of the 6.5-7.5 percent target.
“One of the headwinds is the slowing trade performance because of the impact of weak external demand. Exports have been a drag to Philippine GDP growth,” Fan said.
Based on latest available data, inbound shipments rose by 18.5 percent year-on-year to $8.74 billion in November while exports grew at a slower pace of 1.6 percent to $4.96 billion.
This resulted in a trade deficit of $3.78 billion for the month, higher than the $2.81 billion recorded a year earlier.
Year-to-date, the trade deficit widened by 6.1 percent to $25.7 billion from $24.23 billion.
“We also expect that private investment growth will stay relatively cautious,” Fan also said.
In terms of monetary policy, Fan emphasized that Bangko Sentral ng Pilipinas (BSP) was near the end of a tightening cycle.
“We see just one more interest rate hike this year, particularly in the first quarter,” she said.
The Bangko Sentral ng Pilipinas’ policy-making Monetary Board raised key interest rates five consecutive times last year after inflation breached the 2.0-4.0 percent target starting March.
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