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The Philippines may have a hard time breaching the upper half of its 6 percent to 7 percent growth target amid a slow recovery in household spending, according to BMI Research.
In a report Thursday, the Fitch Group unit said “risk to our growth outlook hinges largely on the recovery in private consumption. In our current forecast, we have taken April’s robust import growth figures to indicate early signs of a rebound in household spending.”
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It noted a “sharp” increase in imports in April, indicating early signs of recovery in demand especially when seen through the lens of the country’s household spending. Merchandise imports in March bounced back by 12.6 percent year on year to $10.98 billion in April after declining by 17.7 percent in February, making it the highest level in five months.
“But if May and June data disappoint, this anticipated recovery in private consumption will not materialize,” the Fitch unit said.
Household spending, which accounts for more than 70 percent of economic output, grew by 4.6 percent in the first quarter, the slowest after the pandemic. Coupled with weak public spending, the country’s economic output as measured by the gross domestic product (GDP) expanded by 5.7 percent during the period.
BMI said the country would also have to hurdle a high interest environment, which has crimped investments, to achieve its growth targets.
The Monetary Board earlier hinted it may cut rates by 25 basis points (bps) as early as August and another 25 bps in the last quarter of the year. The country’s key rate is still at a 17-year high of 6.5 percent.