Swiss lender UBS has upgraded its 2024 and 2025 GDP forecast for the Philippines to 5.7 percent and 6 percent, respectively, a 40 basis points (bp) and 20 basis points increase each from 5.3 and 5.8 percent previously.
The upgrade reflects carryover effects from the fourth quarter 2023 growth, UBS said.
“Full-year 2023 GDP growth was 5.7 percent, with domestic demand growing at around 6 percent. Whilst this is likely the highest growth rate in Southeast Asia, it is still almost 1 percentage point lower than the pre-COVID average growth rate of 6.6 percent,” it said.
“On the bright side, we highlight that inflation has been trending down nicely, surprising consensus on the downside for three months in a row. We had highlighted inflation might surprise to the downside if government interventions to mitigate rice price increases (including increasing imports) are successful,” UBS added.
UBS said it expects inflation to fall further in the first two months of the year due to base effects, before breaching the 4 percent upper bound slightly in the second quarter, also due to base effects.
“We maintain our forecast that BSP (Bangko Sentral ng Pilipinas) will cut rates by 100bp this year, with a 25bp rate cut at each of its four scheduled policy meetings in second half 2024,” it said.
