Philippines Economic Forecast

Philippines Economic Outlook

September 18, 2018

The economy has had a mixed performance in the third quarter of the year. In July, retail sales and remittances grew robustly in annual terms, while the government’s infrastructure program should be boosting fixed investment. However, the manufacturing PMI averaged notably lower in July and August compared to Q2. In addition, consumer confidence for Q3 turned negative and inflation surprised on the upside in August, casting doubts on whether robust consumer spending will be maintained in the months ahead. Moreover, the flipside of the government’s infrastructure push is an ongoing surge in imports of capital goods, which caused the trade deficit to widen hugely year-on-year in July and is constraining economic growth. In mid-September, the country was hit by Typhoon Mangkhut, which will likely fan price pressures in the months ahead and cause agricultural losses running into billions of pesos.

Philippines Economic Growth

The large fiscal stimulus should keep growth elevated this year and next, notably through a surge in fixed investment. However, rising fiscal and current account deficits make the country increasingly vulnerable to external shocks, such as an escalation of U.S.-China trade tensions. Moreover, tighter monetary policy in response to surging inflation could clip private consumption growth. Met the why particular panelists see GDP growth of 6.5% in 2018 and 6.5% again in 2019, which is down 0.1 percentage points from last month’s forecast.

Philippines Economy Data

Population (million)98.299.9112113115
GDP per capita (USD)2,7682,8492,8812,9532,978
GDP (USD bn)272285293305314
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Manufacturing (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate7.
Fiscal Balance (% of GDP)-1.4-0.6-0.9-2.4-2.2
Public Debt (% of GDP)49.245.444.742.142.1
Money (annual variation in %)33.511.59.113.311.6
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)1.62.7-
Policy Interest Rate (%)3.504.
Stock Market (annual variation in %)1.322.8-3.9-1.625.1
Exchange Rate (vs USD)44.3944.7946.9349.6050.01
Exchange Rate (vs USD, aop)42.4644.1145.5347.5050.11
Current Account (% of GDP)
Current Account Balance (USD bn)11.411.87.3-1.2-2.5
Trade Balance (USD billion)-5.7-3.3-12.2-26.7-30.0
Exports (USD billion)56.762.158.857.462.9
Imports (USD billion)62.465.471.184.192.9
Exports (annual variation in %)8.89.5-5.3-2.49.5
Imports (annual variation in %)
International Reserves (USD)83.279.580.780.781.6
External Debt (% of GDP)28.927.326.524.523.3

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Philippines Facts

Bond Yield7.03-4.11 %Sep 24
Exchange Rate54.220.02 %Sep 24
Stock Market7,4340.66 %Sep 24

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