MANILA -The Philippine economy is on track to expand this year, but probably at a slower clip, as stubbornly high inflation may warrant a “higher-for-longer policy rate path,” the International Monetary Fund (IMF) said on Tuesday.
The Fund said it cut its growth forecast for the Philippines to 5.3 percent from a July estimate of 6.2 percent, following a slowdown in second quarter growth, while inflation is expected to stay elevated, hurting consumer demand.
READ: PH GDP growth slowed to 4.3% in Q2 2023
For the year, the IMF expects Philippine inflation to average close to 6 percent, before easing to close to 3.5 percent in 2024, which would probably require the central bank to hold on to higher interest rates.
“Thus, a higher-for-longer policy rate path is warranted until inflation firmly falls within the target range, alongside a tightening bias to anchor inflation expectations,” the Fund said in a statement.
READ: Philippine inflation rose to 5.3% in August
The central bank has kept interest rates steady at its last two meetings, but left the door open to further rate hikes to bring inflation back to its target of 2 percent to 4 percent for the year, after it quickened in August to 5.3 percent.
For 2024, the Philippine economy is projected to expand 6 percent, faster than its previous estimate of 5.5 percent, the Fund added.
The IMF’s revised projections were lower than the government’s targets of 6 percent to 7 percent this year and 6.5 percent to 8 percent next year.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.