SUN LIFE Investment Management and Trust Corporation (SLIMTC) on Wednesday projected that the country’s GDP in the second quarter would be slower than the first quarter while maintaining its 5.35-percent full-year economic growth outlook for 2023 due to base effects.
SLIMTC President and Chief Investment Officer Michael Enriquez explained that the country’s economic growth this year would be buoyed by growth in consumption and capital outlay amid an anticipated global growth slowdown.
Enriquez noted that consumer growth has been “very robust,” especially for non-food spending. The country’s GDP in the first quarter was at 6.4 percent.
“Our economists are more leaning toward a slightly slower second quarter [GDP] since we are looking at 5.35 percent average for the year. This is really mainly due to higher growth posted last year,” Enriquez said in a virtual press briefing.
Based on SLIMTC’s estimates, the country’s GDP this year could be between a low of 4.3 percent to a high of 6.4 percent.
In terms of inflation, Enriquez said SLIMTC sees it tapering off already as the rate of increase in the prices of goods and services has already peaked in January.
SLIMTC expects the country’s inflation rate to average at 5 percent this year following a “more stable” deceleration in monthly changes of the Consumer Price Index.
Given this situation, Enriquez added that they expect the BSP to continuously maintain its current policy rates before starting to cut it a “little bit” by early next year.
“We do not expect the BSP to aggressively cut rates. They may pause and then they may cut a bit. But we won’t see interest rates at the lowest level like three years ago,” he said.
“It could be lower than where it is right now but not as lower than what we saw prior to the pandemic,” he added.
During its last meeting earlier this month, the Monetary Board (MB) kept the prevailing interest rates on BSP’s overnight reverse repurchase facility at 6.25 percent.
The interest rates on the overnight deposit and lending facilities were also maintained at 5.75 percent and 6.75 percent, respectively.
The BSP said it decided to pause its aggressive monetary policy tightening campaign as it believes that inflation is now “firmly on track” to hit the government’s target.