Full-year inflation in the Philippines is seen to be significantly lower than previously expected, thanks to easing international prices of fuel as well as a stronger peso.
“Inflation developments have been encouraging in most of Asia as well, with declines in headline and core inflation in most countries, alongside a further drop in crude oil prices,” Goldman Sachs said in a research note.
“We are adjusting some of our inflation forecasts to be mildly lower to reflect these developments,” the American group said.
Goldman Sachs now forecasts inflation in the Philippines to average 6 percent in 2023, from 6.2 percent in its previous estimate.
Similarly, for 2024, Goldman Sachs has penciled in 3.5-percent inflation instead of the previous 4.2 percent.
In the past 11 months, inflation has averaged 6.2 percent, which is way far off the government’s target range of 2 percent to 4 percent.
According to the International Energy Agency, the global oil market sentiment turned “decidedly bearish” in November and early December as an increase in supply from producers that are not members of the Organization of Petroleum Exporting Countries coincided with slowing growth in global demand.
Meanwhile, the Philippine peso continued to trade below the 56 barrier against the US dollar.
The local currency started trading in 2023 at 55.79, significantly lower than the all-time weakest position of 59 against the greenback that was reached in October 2022.
First Metro Investment Corp. and the University of Asia and the Pacific agreed with Goldman Sachs’ view.