THE slowdown in household consumption as a result of accelerating inflation is seen to hamper GDP growth in the fourth quarter, which could hit just 5.9 percent, according to the ING Bank Manila.
ING Bank Manila Senior Economist Nicholas Antonio T. Mapa said in a yearend briefing, “Fourth quarter [GDP is] 5.9 percent, and the main reason for that is…household consumption is seen to slow. Government spending for this year is sort of buttressing your slowing consumption; however, [Budget Secretary Benjamin E.] Diokno has been indicating that a lot of the projects have been front-loaded in the first three quarters. So we don’t see the same pace of expansion in the government spending for the fourth quarter, very likely we have a growth print of sub 6 [percent],” Mapa said.
As for the full-year GDP forecast for 2018, ING Bank sees a 6.2-percent growth.
The Philippine Statistics Authority (PSA) earlier reported that the country’s GDP for the third quarter has declined to 6.1 percent, lower than the second- quarter figure of 6.2 percent, on the back of slower household consumption.
Meanwhile, Mapa also pointed out that average inflation for 2018 is seen to settle at 5.3 percent, which is not within the inflation target band of the Bangko Sentral ng Pilipinas (BSP) for this year, at 2 to 4 percent.
Inflation for August hit a nine-year high of 6.4 percent, followed by a 6.7-percent inflation rate for September, and remaining steady at 6.7 percent for October.
The PSA on Wednesday reported that the country’s inflation rate dropped to 6 percent for November. The BSP earlier predicted a slowdown for the November inflation due to recent oil price rollbacks, a stable supply of rice, as well as a stronger peso.
Mapa also sees the BSP pausing on rate hikes by this month as inflation is already seen to move in a downward trajectory.
“We feel that there is reason for the BSP to pause in December, mainly because inflation is decelerating by all accounts; inflation expectations seem to be well-anchored. Second, your domestic liquidity remains tight to some extent at 8.2 percent for the M3. We are also seeing growth slowing in the third quarter. GDP looks like it may have a similar trend in the fourth quarter. So, final consumption—if that slows down it may be a possible drag…” he added.
The Monetary Board of the BSP will be having a policy meeting on December 13.