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April 12, 2024

Moody’s Analytics projects brighter outlook for Philippine economy in second half of 2024

Moody’s Analytics forecasts an improved performance for the Philippine economy in the latter half of 2024, citing a slowdown in inflation and the anticipated decrease in central bank interest rates.

In its weekly economic analysis focused on the Asia Pacific region, Moody’s Analytics says it expects the local economy to “fare better this year, especially in the second half.”

“Fading inflation will give the Bangko Sentral ng Pilipinas confidence to lower borrowing costs,” it says.

Moody’s Analytics anticipates that despite volatile inflation in the first half of the year, the BSP will maintain its current interest rates until at least June, potentially signaling its first rate cut. Until then, households may face financial strain.

The report predicts that as borrowing costs decrease, both private consumption and investment will benefit, alongside an improved external economic environment bolstering trade. An expected increase in demand for semiconductors and electronics is projected to brighten prospects in the latter part of the year.

In the fourth quarter of 2023, the Philippine gross domestic product (GDP) grew by 5.6%, lower than the revised 6% growth in the third quarter. The overall GDP growth in 2023 settled at 5.6%, falling short of the government’s target range of 6% to 7% and lower than the 7.6% growth observed in 2022.