High oil prices and taxes may also cut into consumer demand, but remittances from overseas Filipino workers may cushion the impact of an increase in inflation on spending, economists said.
The median forecast of 10 economists was for the economy to grow 4.8 percent in 2005 and 4.5 percent in 2006, slowing from 6.1 percent in 2004 — a 15-year high.
The forecast for 2005 was slightly weaker than in a poll in January, when growth was estimated at five percent, and below the government’s target for GDP growth of 5.3 to 6.3 percent.
"Growth is going to be fairly soft going through most of the year," said Nicholas Bibby, associate director and strategist at Barclays Capital in Singapore.
"We’ve got the impact from the higher oil prices especially. Agriculture hasn’t been doing that well, weaker export growth is also feeding through, and then also you’re going to have some kind of higher taxes, so certainly growth is going to be softer."
Economic Planning Secretary Romulo Neri has said signs from the agriculture sector were not encouraging, with rice and corn planting in the first quarter delayed by lack of rain.
Agricultural output, which accounts for a fifth of GDP, grew 0.55 percent in the year through the first quarter with major crops damaged by storms in late 2004 and droughts this year.
In an effort to cut its dependence on debt to fund a budget deficit expected to hit $3.3 billion this year, the government has put forward a package of tax reforms to shore up revenues.
A key component of the package is a wider value-added tax which Congress passed this week and which is expected to be signed into law soon by President Arroyo.
But the mix of lower farm output, higher taxes and energy costs, and a possible national wage rise could lift inflation.
The central bank has raised its inflation forecast this year to seven to 7.3 percent from 6.8 to seven percent.
One positive factor is the expected strong dollar inflows from overseas workers, which should support consumer spending.
Remittances from more than eight million Filipino workers overseas are expected to rise 10.5 percent this year to $9.4 billion, the central bank said, from $8.5 billion in 2004.